How to Use a Credit Card Without Going Into Debt

Using a credit card without going into debt is surprisingly easy. A lot of people have this perception that a credit card is a sure fire way to get into debt, but this isn’t the case if you’re a savvy credit card user who follows just a few basic guidelines.

The first of these guidelines is to always plan what money you’re going to spend and stick to it. This is an absolute essential part of using a credit card without going into debt. If you make a plan of what you’re going to spend money on, then you remove one of the biggest causes of credit card holders going into debt. What is that cause? The cause is impulse buying. That’s why you need to have a plan and stick to it.

Secondly, always ensure that you pay your credit card off during the interest free period; this will ensure that you won’t get charged the massive interest rates of 15-25%, which a credit card attracts. Getting charged interest on your credit card is just one of the sure fire ways to get into debt with your credit card, but not going over that interest free period is very easy. Just contact you credit card provider and arrange for direct debit of your credit card balance every month from your bank account. Make sure you have enough money in your bank account at the end of each month.

Thirdly, always ensure you set your credit limit as low as possible. This will ensure that any urges you might get to impulse buy will be quickly defeated with the credit limit in mind. Often, the bank or financial institutions will offer you sky high credit limits hoping you will get into debt and have to incur their sky high interest payments, but you can always opt to have a lower credit limit. This helps you to ensure that you won’t get into debt unless, of course, there is a minimum credit limit in place. However, these are still usually a lot less than what a bank will offer as a maximum credit limit.

Finally, but still an extremely important point in ensuring you don’t go into debt when you have a credit card, is avoid as much as possible impulse buying. If you see something and you think “wow, I really want that,” it’s usually best to go home, sleep on it, and make a decision in the morning. If you still want it, make sure it fits into your budget, and then go buy it. This takes the impulse out of impulse buying. This doesn’t mean that you have to miss out on the once in a life time deal. You can always carry some other funding source, such as cash around for those because impulse buying with cash won’t cause you to go into debt, whereas with credit it could.

So as long as you take into consideration the points outlined above and always carefully plan your finances with a financial planner, you hopefully won’t go into debt as the result of a credit card anytime soon.

Write to Julie Williams at julie@creditdonkey.com

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