In terms of best practices, I have 3 habits that will help you stay on the right track with your cards. First, always pay your bill in full. Unless it is an emergency, you should not have to carry a balance. This will help you avoid paying interest charges or fees. Second, sign up for the automatic payment option.

If you miss a payment or make a payment after the due date, you not only incur hefty fees, but you can hurt your credit score. If you enroll in an automatic payment program, you avoid these issues altogether. Finally, make sure to review your statement each month. Take time every month to look through your statement. With breaches and fraud, you have to take time to ensure there are no erroneous charges.

Tom: Sometimes you have to use your credit card for unexpected expenses. How do you prepare for that?

Mellody: That is very true, and actually it is one of the reasons – aside from building credit – that we have credit cards. But as I said, they have to fall within your budget. Outside of responsible use of plastic, it is important to do a few things. First, build and stick to a budget. You hear it from me often, but this is the key first step of financial responsibility. In that budget, make sure you are setting aside money for an emergency fund, for the times that you might have to use your credit card. One last thing: if you already have multiple cards with outstanding debt, make sure you prioritize paying off the highest interest card first.

Tom: Thanks for the tips, Mellody!

 Mellody:  Thanks for having me, Tom!

Mellody is President of Ariel Investments, a Chicago-based money management firm that serves individual investors and retirement plans through its no-load mutual funds and separate accounts. Additionally, she is a regular financial contributor and analyst for CBS News and

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Money Mondays: Credit Card Debt Is Rising Again  was originally published on

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