About 63 percent of those under 30 years of age don’t have a credit card. That’s compared with just 35 percent of those over 30 who’ve chosen to opt out of the credit game.

Those who do have credit cards run into trouble paying their bills.  Many millennials are cutting up their credit cards, and others are choosing not to apply for credit at all. However, this may not be the best long-term strategy.

Although avoiding credit may seem like the best answer in the short term, it may not be your wisest move in the long term. Managing credit cards appropriately is one of the best ways to build strong credit scores. A strong credit score will open doors in the future — like when you apply for car loans, personal loans or mortgages.

Here are some tips to help you manage your credit card activities:

  • Be strategic

Use your credit card for purchases so you can protect yourself against fraud. If you use a debit card, you’re basically giving thieves and hackers direct access to your bank accounts. Instead, pay via credit card whenever there may be a risk. Also, be aware that credit card companies offer better security against fraudulent purchases made on your card.

  • Keep payments up-to-date

If you’re paying your credit card late, you will face high late fees and drooping credit scores. Paying a bill late will also affect interest rates and any loan applications you may file in the future.

  • Use credit cards sparingly

You need to know your money pitfalls. By knowing your weaknesses, you can guard against maxing out your card. Even if you pay the balance in full later, it can still affect your credit score. It’s recommended to not use more than 30 percent of your credit card’s limit. For even better credit scores, experts recommend using less than 10 percent.

  • Don’t carry a balance

If you carry a balance on your card each month, you may be losing more than you realize. Interest payments tap into your wallet and cut away at your financial freedom. Simply sit down with a few recent credit card bills and tally it up. Credit scores are also at risk if you continuously carry a balance on your card.

  • Make more than the minimum payment

By paying just the minimum amount listed on your bill, you may be paying twice or three times more for the item you bought. Is it worth it? Interest fees, late fees and over-the-limit fees will cut into your cash flow.

  • Review your statement

Be aware of your spending habits. Once you know where you are spending your money, it will be easier to see where you need to cut back. It will also help you catch mistakes so you can let your credit card company know right away.

  • Don’t use cash advances

Cash advances will cost you big in interest rates. Such fees are usually higher than the regular rates you pay on your credit card.

  • Be prudent

Despite any reward program the credit card company may offer, don’t charge more than you can pay off in a month. Also, be careful when making a credit card application. Apply for a card you are most likely to qualify for. A failed application still leaves an inquiry on your credit report.

If you’ve been afraid of wading into the world of credit, take heart. Don’t forget that there arefinancial advisors and other professionals who you can consult about your money management decisions. By monitoring spending and using some solid financial advice, it’s possible to avoid debt and build up your credit rating.


This article comes from our friends at Phroogal. It was originally published on January 14, 2016, and can be found on their website here.