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Using Credit Cards without Getting Into Debt

Having a credit card is handy, especially if you are away from home and blow a tire or a fan belt breaks or some other emergency! However, everyone that has a credit card runs the risk of racking up a significant debt.  Credit card debt can quickly spiral out of control. Sometimes it feels like the credit card companies will give you “just enough rope to hang yourself”. But if you learn to use credit cards wisely you can enjoy the benefits without running the risk of hanging yourself.

Have an Emergency Fund

Credit Card DebtOne way in which you can prevent credit card debt from overwhelming you, is to have an emergency fund set up.

The reason many people rack up credit card debt is due to the fact that they don’t have the necessary savings to pay for an emergency, such as replacing a faulty appliance in the home, or repairs to an automobile. A credit card can help you pay the bill quickly (even on a weekend or while traveling) without having to go to the bank to get the cash but …

Faced with this problem, many people charge the expense to their credit card without having the funds set aside to pay the bill and then have to pay high interest charges while they pay it off. But simply setting aside some money into an emergency fund will prevent you from having to pay hefty interest charges.

Remember, car and appliance repairs are not really “emergencies” they are “eventualities”. Eventually your car will need new tires, eventually your washer and water heater will break, you should be setting aside some money to cover these type of events before they happen, even if it is just a few dollars from every paycheck.

If you plan for it these will no longer be “emergencies”! Just “intermittent expenses”.

Note: If you aren’t setting aside money for intermittent expenses you are actually living above your means.

Avoid Running a Balance

Avoid getting into debt over your head by being sure that you can and do pay off the outstanding balance each and every month. This means not spending more than you can afford… which helps you avoid hefty interest charges. These charges can easily double the amount you end up actually paying.

Another way to avoid penalties is to make sure that you pay your bills on time and do not miss a single payment. One tip you can use if you find yourself frequently missing payments is to use electronic bill pay and automatically schedule a minimum payment to your credit card company. So if you forget, at least they will get a minimum payment. That way you will “only” be charged interest and not a penalty as well. But you should also have your account set up so you are notified of a new bill when it arrives and you pay it off entirely every month. Scheduling the minimum is just a back up plan to cover the rare time when you are in the hospital with two broken wrists or traveling in the desert with no access to the internet and can’t make your payment.

I know this sounds extreme, but if you lack self control and consistently spend too much on your credit card, so that you can’t pay off the balance at the end of the month, then you should contact your credit card provider and ask them to lower your credit limit. That way you will not have the ability to charge large and expensive items to your card. But the best solution is learning self control.

Avoid Impulse Buying

A lot of people get into credit card debt due to impulse buying. Often they are “hobby shoppers” who enjoy window shopping. But then they visit a store, see a bargain or something that they feel they must have and then they buy it without thinking about the consequences. In order to avoid this scenario, just stop “window shopping” and you won’t be tempted to buy things you don’t need. It is also a good idea to leave your credit card at home when you go out, so you won’t be tempted to use it on items that are not essential.

It isn’t just impulse buying that can rack up credit card debt. Cash advances are another way in which you can incur high costs and interest rates in a blink of an eye. It is all too tempting to visit the ATM, punch in your pin and withdraw large amounts of cash in an instant. Which might also result in a withdrawal fee.

If you find yourself with a large amount of credit card debt, you should destroy your credit card or freeze it in a block of ice (so you have to think about it seriously before using it). That way you will not be able to add to the debt before you have the chance to pay the outstanding amount. You should make paying it off a priority so you won’t have to pay the interest charges.

Remember all these tricks are just that, tricks to help you develop self control, but the real goal is self-control. Once you develop that you can carry a “Black Credit Card” with an unlimited line of credit or a  dozen other cards for emergencies and not worry about spending too much… not because you are a multi-millionaire but because you know how much you can spend and stick to it.

Do you have a tip on how to ensure that you don’t spend too much? We’d love to hear it! Just put it in the box below.

See Also:

The Money Book for the Young, Fabulous & Broke Debt-Free Forever: Take Control of Your Money and Your Life The Total Money Makeover: Classic Edition: A Proven Plan for Financial Fitness How to Manage Your Money When You Don’t Have Any

Image courtesy of stockimages / FreeDigitalPhotos.net


  1. kas rangan says:

    This is the old school of thought’s responsible living. Its an age old axiom ” live within your means. Credit card company hates such customers for they are no use for them. They just love the guys who live as if they do not have to repay the card company and those are the ones the companies want and revere. Bad debts? so what the insurance company foots the bill.
    Malaise of the present day economics is that you create wealth without any creation. And that glitters, but then “all that glitters is not gold” is conveniently forgotten.

  2. David S. says:

    Be wise in using credit cards to avoid getting into debt. At the same time, be a prudent shopper. You are absolutely correct. A lot of consumers make the mistake of shopping impulsively and accumulate unnecessary debt. This is really something that we all have to stay away from.