Suze Orman's 7 Best Credit Card Tips
by Lyle Daly | Published on Aug. 7, 2021
These are the best pieces of credit card wisdom Suze Orman has dished out.
With several bestselling books, TV appearances, and a popular podcast, Suze Orman is one of the most well-known financial advisors in the world. During her lengthy career, she has provided plenty of guidance on credit cards and how to use them.
Credit card advice from financial gurus can be hit or miss. Some of them discount the benefits credit cards offer and focus entirely on the risk of debt -- you could call this the Dave Ramsey approach.
To her credit, however, Orman hasn't done that. Instead, she has given several good credit card tips that are worth listening to.
1. Pay your credit card bills in full every month
Orman recommends always paying credit card bills in full. It's even the first item on her financial strength test.
This is one of the most popular credit card tips, but there's no overstating how important it is. Paying in full means the card issuer doesn't charge you credit card interest on your purchases. Since you're not carrying a balance, you're not at risk of ending up in credit card debt.
2. If you have credit card debt, pay off the card with the highest APR first
For consumers with credit card debt, Orman recommends a method she calls the credit card roll-down. Here's how it works:
- Make the required minimum payments on all your credit cards.
- Put extra money toward the credit card with the highest interest rate.
- When you pay off that card, move on to the card with the next-highest interest rate.
This is a common repayment method that's often called the debt avalanche. Because it prioritizes cards with higher interest rates, it saves you the most money overall.
3. Look for balance transfer offers to save on credit card debt
Another tip of Orman's for consumers with credit card debt is to look for balance transfer offers. A balance transfer is when you move a balance from one credit card to another with a lower interest rate.
The best balance transfer credit cards offer a 0% intro APR on balance transfers. That type of deal can save you quite a bit compared to a card with an APR of 15% or higher.
You usually need a high credit score, meaning a FICO® Score of 670 or above, to qualify for balance transfer cards. Most of these cards also charge a balance transfer fee of 3% to 5%. Even with that extra cost, you should still come out ahead with what you'd save on interest.
4. Teach your kids about credit
For parents, Orman advises the following:
- Add teens to your credit card as authorized users.
- Let them use their authorized user cards occasionally for agreed-upon expenses.
- Go over the credit card statement and explain the danger of minimum payments. Let them know they should only make purchases they can pay in full.
- Cosign to help them get credit cards of their own.
By following this advice, your kids will have a head start on building good credit scores. They'll also learn how to use credit cards without racking up debt.
5. Check your credit report
Orman believes everyone should check their credit reports annually for errors and signs of identity theft. You can request your credit report from each credit bureau (Equifax, Experian, and TransUnion) at AnnualCreditReport.com.
Consumers are legally entitled to one free annual credit report from each of those credit bureaus (although weekly reports are currently free until April 2022). It's wise to request yours yearly in case there's any inaccurate information or someone has opened an account in your name.
6. Use a cash back credit card
If you stay on top of your credit card bills and have a high credit score, Orman recommends getting a cash back credit card.
That's a great idea if you have no credit card debt and you pay your bill in full every month. Cash back credit cards earn money back on every purchase. Depending on the card and the spending category of the purchase, you could get 2% back or more.
There's just one amendment I'd make to this piece of advice: Don't forget to check out other types of rewards cards, too. Cash back cards are popular for how easy they are to use, but they aren't the only option. For example, if you go on trips often, you may benefit more from travel rewards cards.
7. Stay away from store credit cards
When it comes to store credit cards, Orman isn't a fan because of their high interest rates. She cautions against opening one unless you're sure you'll never carry a balance.
High interest rates aren't the only reason to avoid store cards. Many of these cards are of limited use because they have such store-specific benefits. They only earn bonus rewards on purchases at the store brand that issued them, and your rewards are only redeemable at that store.
Some store credit cards offer more useful perks, and this type of card can be worth it if you shop at the store frequently. But in most cases, it's better to go with a more versatile cash back or travel rewards card.
It's nice to see a popular financial personality who provides sound advice about credit cards. All of Orman's credit card tips listed here are practical and good to follow.
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