The Guide to Having a Credit Card and No Debt
Credit card debt can really ruin a person’s life. Acquiring a number of credit cards with significant credit leans opens the door to a lot of borrowing. Borrowing is easy which, unfortunately, also means getting into a tremendous amount of debt won’t require jumping too many hurdles. Can you really avoid debt while using credit cards? You absolutely can. All you need to do is use the credit cards sensibly.
Keep Limits Reasonably Low
Emergencies occur and access to sufficient credit allows for covering expenses in a pinch. That said, do you really want $50,000 in revolving credit when you only earn $30,000 per year? Well, if you don’t use the credit then you won’t get into trouble. Many people make the mistake of taking too great of an advantage of their credit lines. if you aren’t confident in your ability to control spending and borrowing, then it may be best to keep credit limits reasonably low. You can’t charge beyond what the credit card company allows.
Pay Off The Balance Every Month
This might be the simplest and most obvious of all bits of advice, but it seems to be the advice most commonly ignored. Carrying balances month-after-month leads to the accumulation of interest on the charges. As interest continues to be charged, the balance goes up. Paying off the balance every month prevents interest from accruing, which cuts down on the potential to amass debt.
Those unable to pay the full balance should pay more than the minimum amount due. Paying only the minimum amount means a significant portion of the payment goes to interest and doesn’t fully address the principle. Not cutting down on the amount owed leads to the building up of debt when the card is used again.
Avoid Charging Unessential Items
Yes, there may be times when entertainment and leisure purchases need to go on a credit card. You might even wish to purchase a costly television on credit. Millions of people charge unessential items on their credit cards, which isn’t inherently a bad thing. Where people get themselves into trouble is they purchase way too much on credit and don’t pay down the balances. Buying unessential items on credit becomes a common and troubling way people live totally outside their means.
Choose a Good Card
Applying for the wrong credit card makes debt difficult to avoid even when you are mostly responsible when charging things. High rates of interest, for example, make paying down debt very difficult. So do annual fees that add to the balance. If your credit is good, then the chances of being approved for a solid credit card with excellent terms is likely possible. Why acquire a card with terrible terms and high costs?