How To Use Credit Cards Without Ruining Your Finances

The average person has a credit card debt of over $6000. That’s a pretty scary number and it might put you off the idea of using credit cards at all. It’s so easy to get yourself into a cycle of debt if you’re using credit cards all the time, but that only happens if you’re using them wrong. The truth is, credit cards can actually be a good way to manage your finances if you know what you’re doing. Here’s how to use credit cards properly and avoid getting into financial trouble.

credit card debt

Choose The Right Credit Card

This sounds pretty obvious but a lot of people get it wrong. If you don’t choose wisely when you’re picking a credit card, it’ll be so much harder to use it responsibly and avoid getting into a lot of debt. The first thing to do is think about what you want the card for because there are different deals that are best for different situations. Do you want it for general shopping or for booking travel? Maybe you just want it for emergencies. Work out what you need it for and that will help you pick the right card for you. Check out The Motley Fool credit card reviews page for advice on the best credit cards for each use. You also need to consider the interest rate as well. If you get a card with a high interest rate, you’ll end up in a cycle of debt, just paying off the interest without clearing the balance. A lot of credit cards offer an interest free introductory period for six months to a year which is ideal if you’re just getting a credit card to pay off a big bill that you can’t cover.

Track Your Spending

It’s easy to fall into the trap of thinking of a credit card as an endless supply of money and spending without thinking about it. You’ll get a big shock at the end of the month when you open your credit card statement and realise you’ve spent way more than you thought. That’s why it’s important to make a note of everything that you spend. Download some apps to track your spending and always check statements regularly. You can check them online so there’s no reason to lose track of your spending.

Always Pay On Time

Paying on time is obviously the most important thing when you’re trying to manage your credit cards but it’s worth reiterating. You need to prioritise paying credit card bills over other things if you find yourself struggling to cover all of your bills. The main reason people get into trouble with credit cards is the fees for late payments so you need to avoid them at all costs.

Learn From Your Mistakes

You’re only human and there’s always the chance that you’re going to make some mistakes with your credit cards. That’s fine, as long as you learn from your financial mistakes. When you find yourself in trouble with your credit card payments, make sure that you identify the reasons why. Then you can make sure that you don’t make the same mistakes in the future.  

Credit cards can be a great financial tool if you use them responsibly, but if you get it wrong, you’ll end up in serious trouble.

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