A credit card can be a useful tool in your quest to spend money and manage your finances. While they have long been demonized as tools that put you into debt, this doesn’t have to be the case. How can you use a credit card without going into debt?
Make the Full Payment Each Month
Paying your balance in full each month eliminates the need to pay interest on your credit purchases. It also ensures that you don’t carry a balance from month to month that will have to be repaid at some point. While it may not seem like a big deal to keep $50 or $100 a month on your card, that could add up to hundreds or thousands of dollars over the course of a year.
Don’t Make a Charge Unless You Have the Cash to Pay it Quickly
Many people use credit cards to rack up rewards or cash back that can be used for rewards. If you are going to use a credit card to get cash back from your credit card company, make sure that you have the cash to make the payment before the end of the billing cycle. If given the opportunity, you may wish to use your cash back as a credit toward your monthly payment. This gives you the chance to earn rewards that you may use in the future while ensuring that at least part of your credit card bill is being paid.
Use Balance Transfers to Keep Interest Charges to a Minimum
Instead of paying 20 percent interest on your balance, you can use a balance transfer to keep your interest to as little as 0 percent monthly. On a balance of $100 or more, this could lead to a tangible savings that can make it easier to pay off your bill each month or within a reasonable amount of time. In many cases, people have a hard time paying off their bill and rack up a large debt mostly due to rising interest fees.
Look for a Credit Card That Doesn’t Impose Late Fees or Interest Rate Hikes
Many credit card companies will raise your interest rate or charge you a fee of up to $35 if you are as little as a day late with your payment. While you may be able to plead for leniency with the credit card company, this is not always an option. Therefore, it is important to make sure that you aren’t charged a late fee or any other penalty in the first place. Those who have good credit may find it easier to find such a card.
Your credit card company is going to want to charge you as much interest as possible. While this is good for them, it is bad for you. Therefore, make sure to get a card that either doesn’t charge a lot of interest or pay off the bill before interest is charged. This may enable you to get the most from your card without having to pay a lot of those rewards.
However if you end up racking up debt due to credit card usage, contact the professionals at Rescue One Financial, we can help you regain you financial freedom.