Credit cards offer many advantages: They are an absolute necessity for online shopping, are more secure than cash, and help build a credit history necessary to get a car loan or mortgage. However, they infamously trap many users in a cycle of unmanageable debt.
How then to use credit cards without falling into crippling debt? The trick to credit cards is to use them wisely.
The number one way to keep from accumulating credit card debt is to pay off the entire balance every month. If can’t pay off everything you have charged at the end of the month, you are, in effect, just using your credit card as a high-interest loan.
When considering making a purchase with a credit card using Merchant Services Credit Card Machines , figure out if you have enough money in your bank account to cover it. If you do, go ahead, and make the purchase. If not, refrain.
And when you make that monthly payment for credit cards, make it on time. Credit card companies charge penalties for late payments and might raise your interest rest, increasing your debt load.
Another important step to avoid credit card debt is to establish a budget. Know how much monthly discretionary spending you have. That will tell you whether you have the money on hand to pay your credit card bill at the end of the month.
To simplify the number crunching, only use one—at most two—credit cards. Some businesses don’t accept all cards, so two cards might be useful. However, regularly using more than two credit cards can make it difficult to figure out what you can charge and completely pay off each month.
Sometimes, you must use a credit card to pay for an emergency, like urgent car repairs. If your emergency costs exceed what you can pay off that month, use your credit card—but immediately plan how to pay down that debt. Determine what monthly payments you will need to make and how long you will need to pay them to clear away that debt. As part your budget, include setting aside money each month to build an emergency fund so that you won’t always have to turn to credit cards when the unexpected happens.
Above all, remember to use credit cards only for what you can afford. Take advantage of the conveniences and benefits of credit cards, but do not use them to fund a lifestyle beyond your means. Also, be sure to compare credit cards to ensure that you are picking the right credit card for your lifestyle.
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