Sun Jun 02 2024, by Tyler Gardner

1. Prioritize Paying Off Credit Card Debt

You have no business creating an emergency fund until your credit card debt is 100% paid off. Your credit card debt is your emergency. That debt is costing you 20-30% in interest. An emergency fund, at best, offers a 5% gain through a high yield savings account. Therefore, you are losing 15-20% of your hard-earned money annually.

2. Use Your Credit Card Like a Debit Card

The best thing you can ever do with a credit card is to use it like a debit card. Only buy what you can afford, pay it off immediately, and you'll start gaining 2-3% on cash back or other rewards, rather than losing that 20-30%.

3. Avoid Purchasing What You Can't Afford

The worst thing you can do is to use your credit card to finance purchases that you cannot afford. This behavior leads to accumulating debt due to being charged 20-30% on loans, making it the quickest path to perpetual indebtedness.

4. Choose Your Credit Card Wisely

The smartest strategy you can adopt is to take your time when selecting a credit card. Ensure its rewards program aligns with your preferences and needs. For instance, if you dislike flying, don’t opt for a credit card that rewards high sky miles. Instead, if you enjoy driving, look for a card that offers great cash back at gas stations.

5. Focus on Maintaining a Good Credit Score

Forget about chasing that 800 credit score. As long as your score is above 720, you will have access to the best rates and lines of credit. Achieve this by consistently paying off your credit card debt and keeping your credit utilization rate below 30%. To calculate your utilization rate, compare the balance on your card to the spending limit; for example, with a $1,000 limit, keep your spending below $300.

If any of this is helpful, like and follow for more tips aiming to guide you closer to financial success.

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