Credit card-wielding millennials have some work to do, a recent NerdWallet survey suggests. Americans ages 18 to 34 are more likely than others to be surprised by a big balance, make only the minimum payment and forget to pay their credit card bills. But never fear, millennials: We’ve got you covered with five habits that will save you cash, improve your credit and step up your credit card game in 2016.
1. Track Your Spending
In NerdWallet’s survey, one-third of millennials with credit cards say they are surprised by their bill at least some of the time. The percentage decreases with each subsequent age group. Responsible credit card use dictates that you pay off your balance in full each month, which may be difficult if you’re spending more than you realize.
To avoid this unpleasant shock, create a budget and track your spending. This can be as specific as a line-item amount for each budget category — for example, $200 for entertainment, $300 for groceries, $150 for utilities and so on. Or it can be a set figure that you don’t exceed, such as keeping your monthly credit card spending below $1,000, or some other amount you know you can pay off each month. And while we’re on the subject …
2. Pay More Than the Minimum
Ideally, you should pay off your entire balance monthly to avoid interest and keep your credit utilization low. However, less than half of millennials pay their credit card balance in full each month. About 1 in 5 makes only the minimum payment each month. Doing so can add years to the time you spend paying down your debt and can cost you hundreds, if not thousands, of dollars in interest.
Credit card interest accrues on your average daily balance, so the more you can pay down, the less interest you’ll incur. Even if you aren’t able to pay off your balance in full just yet, aim to pay off as much as reasonably possible each month. You’ll lower the total amount you pay in interest, you’ll eliminate your debt faster, and you’ll reduce your credit utilization, which can boost your credit score.
3. Put Credit Card Bills on Autopay
Paying your bill on time is important both to avoid late fees and to build or maintain a good credit score. But 1 in 4 millennials forgets to pay the bill at least sometimes. If this sounds like you, it’s a good idea to set up autopay for credit cards. That way, your balance will be paid on the due date each month without fail.
Of course, you don’t want to remove yourself from the process completely. Even if the payment is already taken care of, you’ll still want to review your bill each month for fraudulent charges or erroneous fees. This is especially true if you’re among those who occasionally are surprised by how much they’ve spent.
4. Avoid Judging Others for Having Credit Card Debt
Debt is an unfortunate reality for many, with the average indebted household carrying $15,355 in credit card debt. Still, more than a quarter of millennials say they would judge friends or family members for having credit card debt, more than any other age group. But judgment tends to be alienating rather than motivating. Encourage your loved ones as they work to pay off their balances.
5. Cut Yourself Some Slack
In addition to being the age group most likely to judge others for carrying credit card debt, millennials are also most likely to be ashamed of their own balances. More than half of millennials with credit card debt, 53 percent, say they are ashamed of it, compared with 18 percent of Americans 65 and older.
Like judging others, judging yourself for your credit card balance is unproductive. Instead, face the problem and make a plan to pay off your debt. Slash your spending elsewhere and direct any windfalls toward your balance to get it paid off. And in the meantime, be kind to yourself and others — getting out of debt is a process, and it should be applauded, not mocked.
Bottom line: Millennials should aim to track their spending, pay more than the minimum, set up autopay and avoid judging themselves and others for having credit card debt. By adopting these simple credit card habits, they can reduce interest owed, increase their credit scores and cross “get my finances figured out” off their list of resolutions.
More from U.S. News
12 Ways to Be a More Mindful Spender
10 Foolproof Ways to Reach Your Money Goals
10 Money Leaks to Shut Down Now
5 Credit Card Habits Every Millennial Should Cultivate in 2016 originally appeared on usnews.com
