A better title for this article might be “How to live without credit card DEBT,” because it is difficult, if not impossible, nowadays to function in our economy without having at least one credit card account. A credit card that is not loaded up with large balance, accumulated through purchases that should have been made with cash, is just as useful as a wallet full of twenty-dollar bills. The secret here is to have the discipline to never, ever carry over a balance at the end of the month. Following are some pointers, in no particular order of importance, for getting out from under the burden of credit card debt:
. Use only one credit card. Select a card that has no fees associated with having the card. For convenience in processing and paying off your balance, it is best to select the product offered by your bank. If you bank has monthly charges, go elsewhere.
. Use the card’s online service and set your account to pay the balance due automatically. Credit card companies typically offer free online access to your account transactions. Also, software programs like Quicken can download your transaction records to help with budgeting and expenditure tracking.
. Do not, under any circumstances, succumb to the temptation to carry forward a balance. You will end up paying a whopping interest amount that the company can raise without notice. Getting into the habit of “paying as you go” will keep your spending under reasonable constraints and your budget on track. Haven’t made a monthly budget yet? Get busy!
. It is okay to use the card for routine purchases at the gas station or grocery store, but, if you have ready cash, don’t use the card for small-purchase items. Keep a reasonable amount of cash in your wallet at all times for making little purchases at MacDonald’s, etc. In any case, get into the habit of knowing that when you reach for the credit card, it is the same as drawing money from your cash account. Ask yourself this: Do you want to add anywhere from 14 to 25 percent (or more) to the cost of this purchase by carrying forward a balance?
. Use your credit card as a convenient way to conduct business on line, make airline and rental car reservations, etc. However, charge NOTHING that you don’t have cash in the bank to cover when the payment becomes due. Paying off your balance each month is tantamount to receiving an immediate interest-free loan from the credit card company, while at the same time bulking up your credit rating.
So, in the end, living totally without a credit card is possible, but is prohibitively inconvenient in many cases. The key here is to view the credit card as an extra tool in your financial kit help with budgeting, tracking expenditures and being treated with respect by those whose businesses depend on credit card use.