If your credit card comes with a good rewards program, you may want to use it as much as possible in order to rack up points. It is, in fact, possible for Florida consumers to switch over to a “credit only” budgeting system. However, successfully engaging in such a budget requires discipline, planning, and a large spending limit. Conversely, Florida residents with little available credit and overspending habits should avoid using credit cards for everyday purchases.
Why Using Credit Cards for Everyday Purchases in Florida Requires Large Spending Limits
Florida card holders who want to pay for most expenses with credit cards to earn rewards should have sizeable credit limits. This is because your credit utilization rate matters in the calculation of your credit score. Ideally, you should use no more than 30% of your spending limit on any credit card at any time. Say, for example, you want to charge $1,000 a month to a credit card. In order to protect your credit score, this credit card should have a spending limit of at least $3,300.
If, on the other hand, your available credit for that credit card is only $2,000, charging $1,000 a month keeps your utilization rate at around 50% (unless you make multiple payments). In the eyes of potential lenders, this makes you seem too reliant on credit, and possibly a lending risk. This is why credit scores drop when credit card utilization rates rise.
Survival Tips for Florida Consumers Who Want to Use Credit Cards for Everyday Purchases
For some Florida consumers, switching over to a “credit only” budgeting system makes sense. If you keep track of your spending and pay off your balance every month, the system works. You then earn reward points for necessary purchases without building debt. Here are the “rules” for “credit only” budgeting systems.
Pay off your balance every month.
As mentioned earlier, this is an important part of successfully using this system. By not rolling balances over from month to month, you avoid paying interest charges. Also, once Florida credit card users start letting balances slide, there is more temptation to go off-budget and overspend. Some Florida consumers set up automatic payments to make sure credit card bills are paid, in full, every month. If you do this, make sure to keep a close eye on your bank account to avoid overdraft fees.
Stick to your planned budget.
Those who use credit cards for everyday purchases should carefully track their spending with a spreadsheet or even budgeting software. Keeping a running tally of your expenses is important because, when you look at your bank account, it may seem like you have extra money. In reality, a big chunk of these funds is slated for a credit card bill. Using credit cards to pay for nearly everything can also lead undisciplined Florida consumers down a slippery slope. You think, “I can let a balance roll over just this once. I’ll make it up next month.” Yet, when the next month rolls around, you may find yourself tempted to do the same thing. This is how Florida credit card users build up thousands of dollars in credit card debt.
Keep your utilization rate as low as possible.
Even if you have a high spending limit, caution is still called for with heavy credit card use. Again, try to keep your balances at or below 30% of your available credit at all times. No matter what kinds of rewards you’re earning, they’re not worth the sacrificing of your credit score. Keeping your credit utilization rate low is easier if you make two or more payments every month. In fact, some “credit only” budgeters in Florida make credit card payments on their paydays – weekly or biweekly.
Why “Credit Only” Budgeters in Florida Should Regularly Check their Credit Reports
Florida consumers who engage in heavy credit card use should frequently check their credit reports for accuracy. Unfortunately, creditors and credit reporting bureaus often make mistakes that end up as errors on credit reports. So, more credit card activity means more credit reporting, which can lead to more credit report errors.
If you haven’t checked your credit reports in a while, go to www.annualcreditreport.com. Here, you can request copies of your credit reports from TransUnion, Equifax, and Experian. Under the Fair and Accurate Credit Transactions Act (FACTA), you can do this for free every 12 months.
If you find inaccuracies on any of your credit reports, call Credit Repair Lawyers of America in Florida. When you call our firm about your credit issues, an experienced credit attorney will handle the error disputing process for you – for FREE. This way, you get clean credit reports without the hassle and frustration of dealing with the credit reporting agencies on your own.
The Free and Legal Way to Get Better Credit
Don’t let errors on your credit reports bring your credit score down. At Credit Repair Lawyers of America, we’ve been cleaning up credit reports for consumers since 2008 for free. How do we do it? All of our fees come from the defendants in settled cases. This is why our clients pay nothing for the work we do.
Let’s start the conversation about what we can do for your credit. Set up your free consultation today by calling Attorney Gary Nitzkin at (408) 290-3994 or sending him a message through our contact page.