As budgets are getting squeezed at the grocery store and gas pump, individuals may be turning to credit card use for disposable expenses.
Lisa Piercefield is a Senior Manager of a national credit counseling company. She said this could be a dangerous tactic considering inflation.
“If they don’t currently have the money for the expense, what’s going to be the difference next time when that same expense comes along,” Piercefield said. “Like how are they going to be able to afford it and what about the payment when the bill comes to due, so that’s the danger that we are seeing.”
Piercefield said her first suggestion to avoid this is to create a budget to learn what you can afford. Piercefield said if you find yourself in a situation where a credit card is your only choice, she recommends just using one card.
“Preferable the one that has no balance or low interest rate, and then keep track of the amount they are spending on the credit card,” Piercefield said. “It’s very easy to just spend and spend and spend, and by the time you see the bill, you’ve racked up a large balance you might have not been aware of.”
Piercefield said she also suggests paying bills in full on time to avoid interest charges. Piercefield said missing due dates, using credit cards to pay bills and using money from other bills to pay all signs of over spending.
“There are two main components of your credit score,” Piercefield said. “One is the payment history and the other is the utilization ratio. Together those two major components make about 65 percent of an individuals credit score. So, making payments on time is crucial.”
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