When It's Okay to Break the Rules
Updated: Aug 10
These Credit Card Rules Are Okay to Break When You Can't Make the Payments
You have probably received a lot of great advice about credit cards. However, much of this advice is directed towards people who are doing well financially. If you are struggling and need credit help, then it is okay for you to break the following rules.
Never Carry a Balance You have likely been told that it is never a good idea for you to carry a credit card balance. Carrying a balance on your card will cost you more in the long run. It can also be a sign of improper money management. However, this may not be practical if you are in a financial bind. You should try your best to make at least the minimum payment. You may also want to contact your credit card company if you are having trouble making the payments. They may also be able to reduce the interest rate. Keeping the Utilization Percentage Under 30 Percent Your utilization ratio is the amount of credit that you use. For example, if the limit on your credit card is $5,000 and the balance is $1,000, then your credit utilization rate is 20 percent. You have probably been told that you should keep the utilization rate should be below 30 percent.
However, this may be impossible if you are struggling financially. It is also a good idea for you to ask for a limit increase. You will be able to carry a higher balance and maintain a lower utilization rate. Not Using a Card for Emergency Purposes It is a good idea for you to have an emergency fund. This emergency fund should be able to cover at least three months' worth of expenses. However, most people do not have this. In fact, there are many people who have less than $400 in their bank account. You have probably been told that you should not use your card for emergency purposes. However, if you do not have money in your savings account, then it is okay for you to put an emergency purchase on your card. Avoiding Harming Your Score Putting everything on your card can hurt your score. However, if you have to use your card to keep a roof over your head and buy food, then your score is the last thing that you should worry about. That three-digit number can change at any time. You can always ask for credit help later in order to rebuild your score.