You may not be able to avoid having a credit card, but that doesn’t mean you can’t avoid having credit card debt. There are many valid reasons for owning a credit card such as for large purchases and in case of an emergency. Just because you have a credit card though, doesn’t mean you should always use it. It is important for each credit card owner to know how to manage the balance and avoid credit card debt.
The best advice that can be given to a credit card owner is to use your card as if it were cash. Only make purchases on the card for items you know you can afford so that you will be able to pay the purchase off in a timely manner. The most dangerous purchases on credit cards are the ones you know you can’t afford because then you are not going to be able to pay them off and the balance will slowly become more than you can manage.
A common mistake people make is thinking that they can afford to charge something on a credit card and then pay it off later. If you are making payments on the items you can afford to purchase and the items you can’t afford to purchase at the same time – chances are your balance is going to get away from you. In this situation, eventually you won’t be able to afford any purchases because your minimum monthly payment on your credit card will be more than you can afford each month.
To manage your balance, it is important to truly analyze each item you are considering purchasing before sliding the card through the cashier’s machine. If you tell yourself you need the item but can’t afford it at the moment – consider how much you really need it before you put it on your credit card. Each item viewed individually may not seem like a large expense, but your credit card company does not bill you for each item individually. You will be billed at the end of the month for the total of everything you paid for with your credit card and that number may be a lot harder to manage than you thought it would be when you bought each item. This will be especially difficult if you still have a remaining balance from previous months.
It is also important to pay the balance off at the end of each month to help avoid credit card debt. You don’t want to struggle to pay for the purchases you made months (or even years) ago while you’re also trying to pay for your new purchases or the emergency medical attention your child needed.
Paying the balance at the end of each month will help you manage how much money you can afford to put on your credit card each month because you will know how much you need to pay as you go. That way you will also always have the card available for emergencies because you won’t have a balance too high when you pay it off each month.