Should I Get a Credit Card if I Have Poor Money Management Skills?

Credit Cards and Budgeting

Credit cards are a vital part of everyday life for the average person because they have become essential tools in the online marketplace. So based on the widespread scope and use of credit cards I wholeheartedly recommend that every independent adult carry a credit card. This simply makes life easier from many perspectives.

The benefits of owning a credit card are plentiful and include:

  • More efficient purchasing transactions
  • Safer and more secure financial transactions
  • Greater variety of payment options
  • Low or no interest fast-track credit
  • Card rewards and benefits
  • Credit building resources

While credit cards can be great tools, I emphatically recommend exercising sound financial management strategies when using them. This means that you need to plan and budget properly to avoid getting into debt or paying high-interest rates. Obviously, this isn’t easy for someone who has poor money management skills. However, all is not lost just because you may be a bit deficient in your budgeting skills.

There are ways that you can monitor and limit your own spending when you obtain a credit card. Such tools can help you take advantage of the many benefits of having a credit card while still enabling you to avoid or decrease credit card debt. So if you desire to have a credit card but you are having trouble keeping track of your finances, here are tips that can assist you.

Credit Alerts

If you are concerned about spending too much on your credit card from month to month you can set spending alerts on your card. Most major credit card issuers have this functionality on their online card management portals. You can simply set alerts to be sent via email or text message for you or secondary cardholders.

For instance, if you want to keep your spending limit to $500 per month you can set an alert to remind you when you reach this amount. This way you can curtail your spending before you reach your limit.

These types of alert systems are great for people who have challenges keeping track of what they spend but are easily able to control their spending. I personally like these types of reminder systems because they allow me to use my card while staying on track with my monthly budget. This way I can keep my credit profile active yet not overspend or go into unnecessary debt each month. Also, I can earn cool cash, point, and travel rewards while staying within my budget.

Spending Limits

Another option is to set hard spending limits on your card that don’t allow you to go over the spend amount at all. Unfortunately, this option is only available if you are a secondary user on someone else’s account. But it is still a great option if you have issues with money management. You get to take advantage of this credit-building tool while learning the art and science of money management.

Credit alerts give you soft reminders that you are approaching your credit limit. However, you can still go over the alert limit without interacting with your credit card management system.

If you are an authorized user on someone else’s account, they can set a spending limit for you which will not allow you to go over this limit. They will have to change the limit in order for you to go over the spending limit. This option is great for young adults who are just starting out in life. They can be added to their parent’s or their spouse’s accounts even if they have no credit history.

This feature is not available on all credit cards so you need to check with your card issuer before applying if this is something that you are interested in. American Express is one of the few card issuers that has this feature on all of its cards. However, there are a few other issuers that have this feature for some of the cards in their product lines.

I have limited the spending limit on my children’s accounts since they are in the process of learning about money management. I give them a monthly budget and spending parameters so I set their spending limit to ensure that they don’t surpass their budgets. As they grow and become more responsible, I plan to expand their spending limit.

Credit Freezes

Whether you have your own credit card or you are an authorized user on someone else’s card, a third option is to freeze the card. You can freeze your own account if you are the primary cardholder and you can freeze the accounts of authorized users. Freezing a credit card means that it can’t be used for new purchases by one or more authorized users. However, any prior authorized purchases or recurring payments from the card will continue unless you stop them.

This is a very effective option if you want to have a credit card handy for large or unexpected purchases. If you don’t use your card on a regular basis freezing it can also help protect it from fraud. This is also useful for those who have issues with controlling their spending.

Because I have several personal and business credit cards, I have frozen one of them that I don’t use on a regular basis. I actually plan to close the account before it incurs the annual fee payment at the end of this year. However, since I don’t use it and still want to have the credit line available to me for a while I have frozen it for me and all authorized users. This way I don’t have to worry if it gets lost or stolen since I don’t carry it with me like the other cards that I use on a regular basis.