Make These 4 Moves if You're Relying On a Credit Card During High Inflation

With the right moves, you can use credit cards responsibly to combat high inflation.

Many Americans are struggling amid higher costs due to inflation. If you're having a tough time paying for your everyday living expenses now, you may be tempted to use credit cards more.

While credit cards are convenient, it can be easy to accumulate credit card debt if you're not cautious -- and expensive debt like this can quickly worsen your financial situation. Luckily, there are ways to use credit cards to your advantage without falling into costly debt.

Credit card usage is on the rise

Now that everyday essentials cost more, most Americans are trying to stretch their money as far as possible. It can be challenging to afford higher living costs if you haven't gotten a raise or don't have the opportunity to boost your current income.

These days, you may pull your credit card out of your wallet more frequently while in the checkout line. If you are, you're not alone. Credit card usage is on the rise.

The Federal Reserve Bank of New York released the latest findings of its Quarterly Report on Household Debt and Credit. In the second quarter of this year, consumer credit card balances saw a $46 billion increase since the first quarter of 2022.

Here are a few smart moves you can make when using credit cards during high inflation.

1. Pay off as much of your balance as possible

It's essential to take steps to avoid high-interest charges. When your credit card bill comes, pay off as much of the balance as you can. You'll be charged interest if you fall into the trap of only paying the minimum amount due. These charges can add up quickly if you continue to carry a monthly balance.

The best move is to pay off your entire balance in full. When you do this, no credit card interest is charged. However, if that's not possible, pay as much as you can each month so you don't worsen your current financial situation.

2. Take advantage of 0% APR credit cards

If you know that you won't be able to pay your entire card balance off in the coming months or have an unexpected costly purchase that you need to pay, consider opening a credit card that has a 0% interest rate offer.

Some 0% APR credit cards charge no interest on new purchases for a limited time. Typically, promotional periods last 12 months or more, but they can vary, so check the details before opening a new card.

If you have existing debt due to using your card more in recent months, you have another option to explore that could help you get out of credit card debt.

Some 0% APR cards are marketed as balance transfer credit cards, allowing you to transfer existing credit card debt without incurring additional interest. Keep in mind that you'll likely pay a balance transfer fee.

Balance transfer cards have a set timeframe where no interest charges occur on debt that you've transferred to your new card, giving you more time to pay off your debt.

0% APR credit cards may be a good option, but you must pay off your debt before the promotional period ends to avoid interest charges.

3. Earn rewards on your spending

You're missing out if you're not yet using rewards credit cards. You might as well earn rewards for using credit cards regularly. Consider signing up for a new rewards credit card, so you earn points, miles, or cash back when you use your card.

Figuring out where you're spending a good chunk of money before choosing a new rewards card. Grocery costs are much higher than they were a year ago. Many people use grocery credit cards to earn rewards on high grocery bills.

Many rewards cards offer a sign-up bonus if you meet the minimum spend -- so you can earn rewards quickly with a new card.

4. Use cash back rewards to cover expenses

If you already use rewards credit cards, you may want to consider redeeming your saved-up rewards. You can use cash back earnings to put some extra money in your bank account or to cover recent credit card purchases that you've made. Check out our best cash back credit cards if you're interested in earning rewards.

Don't be afraid to use credit cards to cover your daily expenses. But do use cards with care. If you're strategic, you can use credit cards to your advantage as you do your best to battle higher-than-normal everyday costs.