A credit card is one of the best ways to make purchases and payments even if you don’t have sufficient cash on hand or funds in your account. But most people find it hard to imagine their life without one when they start using a credit card. However, they can build a huge wall of debt if not used cautiously. Carrying too much credit card debt brings a lot of financial problems like thousands of dollars in terms of interest payments, tardy financial goals, and poor credit scores, etc. 

To help you avoid credit card debt, here are some tips to use a credit card prudently to not end up in debt.

Pay your Credit Card Bill with Every Pay Cheque

When using a credit card either for personal or business use, you should make payments to your card whenever you receive your paycheque. It not only helps you avoid building debt but improves your credit score as well. Furthermore, making credit card payments in a timely manner also helps you ensure that you don’t spend money elsewhere. 

Build Credit without Going into Debt

The use of credit card is one of the best ways to build good credit until you use it responsibly. There are many ways to avoid overspending using a card such as setting up pre-authorized charges for several monthly payments like gym membership fees, utility bills, or other online payments. Once payments are made, the card will be locked up automatically. In this way, you are better able to build credit without getting into debt because you have planned your payments smartly. 

Make Sure Your “Rewards” Are Worth It

Credit cards usually come with enticing rewards and benefits such as 0% balance transfer, cashback and free rewards, etc. But you should keep in mind that they also lure you to spend more. The best way to take advantage of such rewards is to never make purchases just because it will earn you free rewards. Just make purchases or payments that are most important to you. Furthermore, go through the fine print carefully to understand the terms and conditions in a detailed manner. It can be easy to earn free rewards by making an extra purchase but it could be hard for you to pay off later. That’s why just spend money on things you can easily afford to pay.

Keep the Limit as Low as Possible

If your current card has a higher limit than you are comfortable with, contact the customer services department and request a lower limit. It will not only help you build a good credit score but will reduce the chances of fraud as well. A lower credit limit means cybercriminals or modern thieves can do less harm to your money. You don’t always need higher limits to make purchases like a hotel stay or an air ticket. But the credit card provider can temporarily increase the limit to help you make big purchases. So, stick to your budget and lower your limits to reasonable and affordable.

Don’t Use Credit to Pay for Credit

Since a line of credit usually comes with a lower interest rate, most people use it to make payments towards credit card bills. Some of them also apply for a credit card with a lower promotional interest offer also known as interest free credit card. After that, they do a balance transfer to pay off the debt of their higher interest credit cards. This may reduce the amount of interest charges; it may also open door to get deeper into credit card debt. 

Experts say that if you really want to take advantage of a balance transfer credit card, close the card you transferred balance from and create a plan to pay off the debt before the promotional period expires. If you don’t have a proper debt repayment plan, don’t use your credit to pay for another credit as it can build a huge wall of debt that you might not be able to pay easily.