Money Management

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What Happened: Experian recently released research on how inflation has affected credit card usage. It found that credit card usage was up by more than 7% year over year at the end of June 2022 in all but three states. The exceptions were Alaska, South Dakota, and Wyoming, where credit card usage rose by 6.6%, 6.6%, and 6.9%, respectively. These increases corresponded with the cost of living rising across the United States.So What: Consumer purchasing power has declined significantly since 2021. The countrywide increase in credit card usage is a sign that Americans are borrowing more money to pay for their expenses.
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What makes this especially problematic is that interest rates are also on the rise. While credit card interest rates went through a small dip at the end of 2021, they’ve increased throughout 2022. The average interest rate for credit cards issued by commercial banks was 16.65% in the second quarter. It rose to 18.43% in the third quarter of the year. Higher interest rates mean that “consumers could feel a heavier burden if they don’t pay their full credit card balance each month,” according to Dom DiFurio, staff writer at Stacker, per research from Experian.Now What: The cost of living has been hard on people’s budgets, but borrowing more on your credit cards comes with serious risks. This raises your credit utilization ratio, which is your credit card balances divided by your credit limits. Your credit utilization is an important factor used to calculate your credit score. The lower your utilization is, the better. As a general rule, a credit utilization of 30% or higher negatively impacts your credit score.Fortunately, there are several ways to keep credit utilization down, even if you need to spend more. You can:Contact your credit card issuer to ask for a credit limit increase. If the card issuer raises your credit limit, this will lower your credit utilization.Open a new credit card. This also increases your overall credit limit and lowers your utilization. Specifically, look at 0% intro APR credit cards, which let you avoid interest charges during an intro period.Consider a debt consolidation loan. You can use this type of personal loan to pay off credit card debt.To avoid larger financial issues, also look for ways to cut costs so you don’t need to rely on your credit cards. Even if higher credit usage isn’t affecting your credit score yet, credit card debt is still expensive. It could also keep growing until you adjust your budget and start a payment plan. Make paying off credit card debt a priority, both for your credit score and your overall financial health.Top credit card wipes out interest until 2024If you have credit card debt, transferring it to this top balance transfer card secures you a 0% intro APR for up to 21 months! Plus, you’ll pay no annual fee. Those are just a few reasons why our experts rate this card as a top pick to help get control of your debt. Read our full review for free and apply in just 2 minutes.We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy. 

What Happened: Experian recently released research on how inflation has affected credit card usage. It found that credit card usage was up by more than 7% year over year at the end of June 2022 in all but three states. The exceptions were Alaska, South Dakota, and Wyoming, where credit card usage rose by 6.6%, 6.6%, and 6.9%, respectively. These increases corresponded with the cost of living rising across the United States.

So What: Consumer purchasing power has declined significantly since 2021. The countrywide increase in credit card usage is a sign that Americans are borrowing more money to pay for their expenses.

What makes this especially problematic is that interest rates are also on the rise. While credit card interest rates went through a small dip at the end of 2021, they’ve increased throughout 2022. The average interest rate for credit cards issued by commercial banks was 16.65% in the second quarter. It rose to 18.43% in the third quarter of the year. Higher interest rates mean that “consumers could feel a heavier burden if they don’t pay their full credit card balance each month,” according to Dom DiFurio, staff writer at Stacker, per research from Experian.

Now What: The cost of living has been hard on people’s budgets, but borrowing more on your credit cards comes with serious risks. This raises your credit utilization ratio, which is your credit card balances divided by your credit limits. Your credit utilization is an important factor used to calculate your credit score. The lower your utilization is, the better. As a general rule, a credit utilization of 30% or higher negatively impacts your credit score.

Fortunately, there are several ways to keep credit utilization down, even if you need to spend more. You can:

Contact your credit card issuer to ask for a credit limit increase. If the card issuer raises your credit limit, this will lower your credit utilization.Open a new credit card. This also increases your overall credit limit and lowers your utilization. Specifically, look at 0% intro APR credit cards, which let you avoid interest charges during an intro period.Consider a debt consolidation loan. You can use this type of personal loan to pay off credit card debt.

To avoid larger financial issues, also look for ways to cut costs so you don’t need to rely on your credit cards. Even if higher credit usage isn’t affecting your credit score yet, credit card debt is still expensive. It could also keep growing until you adjust your budget and start a payment plan. Make paying off credit card debt a priority, both for your credit score and your overall financial health.

Top credit card wipes out interest until 2024

If you have credit card debt, transferring it to this top balance transfer card secures you a 0% intro APR for up to 21 months! Plus, you’ll pay no annual fee. Those are just a few reasons why our experts rate this card as a top pick to help get control of your debt. Read our full review for free and apply in just 2 minutes.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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With the right moves, you can make your side gig even more lucrative. 

There are plenty of good reasons to hold down a second job. Maybe higher living costs have been driving you to the edge of debt, and you need the income from an additional job to avoid having to carry a credit card balance forward. Or maybe you have different goals your side hustle is helping you meet, like building an emergency fund or saving up for a down payment on a house.

Working a side hustle could also make it possible to spend more on the things you enjoy. Love dining out? If you’re earning extra money from a second job, you may have the option to join your friends at a nice restaurant twice a week without having to worry about the cost. And if you’re big on traveling, your side hustle could help you nicely pad your vacation budget.

But if you’re going to put in the time to have a side hustle, you might as well try to earn as much money from it as you can. And these tips could help you eke out more income from your second gig in the new year.

1. Increase your hours

You might spend eight hours a week on your side hustle right now, and that’s impressive in its own right. But if you’re able to ramp up from eight hours a week to 10, you stand to boost your income even more. So take a look at your schedule and see what’s feasible. If you’re wrapping up a big project at your main job, you may not have to put in as many hours there, leaving you free to increase your side hustle hours.

2. Raise your rates

Maybe you get paid hourly for your side hustle as a pet sitter, tutor, or house cleaner. If you raise your rates, you’ll boost your income without having to do extra work. Of course, your clients may not be thrilled with the idea of having to pay more for the same services. But if you have a solid, long-standing relationship with them, you can explain that inflation is driving your expenses up just like everyone else’s, and you need to raise your rates to keep up.

3. Find a better way to get clients

If you currently spend several hours a week trying to market yourself as a gig worker, that’s time you could be spending working and earning money instead. Rather than spinning your wheels, try to find ways to more easily drum up business. That could mean boosting your social media presence or asking existing clients to refer you to other people who might need your services.

4. Get more efficient at what you do

The better you get at your craft, the more money you might make from your side hustle. Let’s say your second job involves selling homemade jewelry or updating websites. If you find ways to do that work in a shorter amount of time, you’ll be able to take on more work — and earn more money.

A side hustle could do a lot of great things for your finances. Follow these tips to make yours even more rewarding.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

 Read More