Bad habits do not die easily. So if you want to avoid having debts, you want to control your credit card usage. Most of us risk our financial freedom by falling into the trap of credit card debt. Credit card usage is a way of life for us, but used improperly it will result in high debt and high interest. Knowing how to use a credit card is an important part of avoiding debt. Here are tips on inappropriate and appropriate ways to use a credit card. These will help you stay away from credit card debt.
Don’t charge what you can’t afford
Many of us make the basic mistake of charging items which we are unable to pay for with cash. This is the indication of living beyond the means if you fail to pay for the item with cash or pay the balance at the end of the month. Charging items which we can’t afford would leave us with credit card debt.
Don’t take cash advances
Accepting or taking cash advances will only result in high-interest rates with increased transaction fees and without any grace period. This only means that the accumulation of the interest begins right from the day the consumer has taken the advance. Though you might have paid in full at the end of the month, you still pay the interest on the cash borrowed. Taking a cash advance is just another way for you to get credit card debt that you can’t manage.
Don’t purchase special services
Most of the credit card companies offer products which include insurance. Such services are not at all necessary for most of us and are often overpriced. In purchasing such unnecessary services, we allow and accept credit card debt.
Do create a budget
Instead of relying on the credit limits set by the credit card company, you should be active in avoiding a credit card debt. This can be done by setting up a budget to ensure that you spend on what you can afford. It’s also a fantastic way to ensure you purchase only what you need.
Do use only for emergencies
Sometimes avoiding debt in emergencies is impossible. If it is not feasible to pay for an item or service with cash, make the purchase with a credit card. To stay out of debt, make a plan for paying it down. If you use the card only for emergencies, then you are doing a lot to reduce credit card debt.
Do pay the balance in full each month.
Only make charges if you can pay off the entire credit card balance when it is due. Avoid interest charges by paying off the balance in full each month. A budget can be an effective way of ensuring that you have sufficient money to pay the balance and avoid credit card debt.
A visit to 4 Pillars will help you reduce credit card debt and give you a path towards financial independence. And no more sleepless nights spent worrying about your debt!