Top 7 Ways to Use a Credit Card and Avoid Debt




If you just got a credit card, you are at risk of accumulating a lot of debt if you are not responsible in repaying it. If it is allowed to pile up, it may take you months or even years to pay it all off not to mention the sacrifices you would have to make to do it.

So if you have not gotten into debt yet, here are some tips that can help you avoid it altogether:


1. Avoid Big Purchases


Create a savings account and use that to collect the money you need for big purchases such as a new car or a flat screen television. Keep your credit card at home when you are making said purchases so that you are not tempted to buy anything else. Use it to make planned purchases that you can pay off when that bill comes in the mail. Since you will have the money saved for it, you’ll be good.

2. Prepay the Card


Once you figure out how much you spend every month, pay the amount from your paycheck each time. For instance, if your dine-out budget is $50, pay $50 from your paycheck for your credit card so that you don’t use it on something else. This will go a long way in helping you maintain a budget, create a positive credit rating and reduce your credit card bill significantly. However, this strategy will only work if you pay the full due amount each month.

3. Keep the Limit As Low As Possible


Ask your credit card company how low you can go with your credit limit. They aren’t allowed to raise that limit without the consent of the cardholder so chances are that they might try to convince you to take your request back. Don’t back down and have your credit limit reduced to an amount that is reasonable.

Contrary to popular belief, you don’t need a high credit limit or use a number of cards to create a positive credit rating. Plus, if you get a low limit and your card information is stolen, the thief can’t do much damage either.

4. Get a Debit Card


If you don’t want to carry cash around and don’t want to use your credit card either, consider getting a debit card as well. It works like a credit card but minus the debt. With one swipe you can make purchases anywhere from your own hard earned money. That’s because this card allows you to tap right into your bank account.

So you won’t have to pay back the credit card company at the end of the month at all. However, be as careful about your expenditures as if you are paying with credit – you don’t want to drain your account and use the credit card in desperation in the end.


5. Think Carefully Before Using the Credit Card


If you absolutely have to use the credit card ask yourself if you really need to. If the purchase is worthy, then ask yourself if you have the cash for it or do you need the card. If you choose the card to get luxury items, give yourself some time before making a final decision.

If you don’t need that item and cannot stop yourself from buying it, freeze your card, literally. If the purchase is worthy enough, you will not have any qualms about chipping away at that ice to get to the card. Just make sure that you consult with your partner beforehand.

Try not to use your card on clothes and cars or disposable goods such as toiletries and groceries. If you maintain a balance, you will end up paying interest on something that doesn’t exist. Use your credit card on essentials such as business and education expenses as well as medical emergencies.

To make yourself accustomed to using cash, live without your credit card for a month. That way you can figure out where your money is going and how fast you run out of it. Maybe you take out $100 thinking you have enough money to take care of your weekly needs, but you end up spending $150 instead. By determining the difference between your budget and actual budgetary needs you can take stock of the money you are willing to spend. This will change the way you prioritize purchases and make even financial issues a breeze to manage.

6. Shopaholics and Credit Cards Don’t Mix


If you are a shopaholic, chances are you buy items you don’t really need regularly. If this is you, a credit card is not for you. Think you are a responsible shopper? If these signs seem familiar, a credit card should not be in your bag at all:


  • You get really excited when you see something that you absolutely have to have, only to feel guilty when you return home. 
  • You have a number of items at home that still have price tags attached to them and have never been used. 
  • You lie to your spouse a lot about purchases or your spending habits.


7. Don’t Use the Card to Pay for Credit or Get Reward Items


Many people make the mistake of using their line of credit to pay off the interest rate on their credit card. However, if that line of credit is not paid off, your debt will only keep increasing each month. If you find yourself in debt and are unable to pay it off, get help as soon as possible.

This should be your priority especially if you find yourself using the card for living expenses. Pretty soon you will max out the card and will be in more debt. Before using a new card take a thorough look at the terms and conditions as well as the rewards program. Collecting points is easy, but the items on offer may be less expensive if you buy them with cash instead.

These simple tips should help you avoid credit card debt or at least help you pay it off each month. Make responsible purchases and use the card for emergencies only.

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