Though credit cards are not the only cause of consumer debt, they’re by far the easiest type of debt to accumulate. Some people advise “cutting up your plastic” in order to prevent more debt, but it’s much more effective to retrain yourself to use those little pieces of plastic responsibly.
How to Use Credit Cards Responsibly
The first rule, the ONLY rule, is this: you must pay off your credit card bill in full each and every month. Once you’re able to consistently do that, there are currently only two reasons I’d recommend using a credit card:
- Convenience
- Rewards
Convenience
No, not the convenience you’re probably thinking of. I’m talking about the convenience of recordkeeping. Credit cards are easier and more accurate than cash for budgeting and recordkeeping. If you make almost all of your purchases with a credit card, you’ll receive a documented record of your spending each month. BUT, the convenience of credit cards has one main catch—the temptation to make purchases on credit by not paying off your balance in full each month. If you do intend to use a credit card after getting out of debt, you must pay off the balance in full each month.
Rewards
Using a credit card for the rewards make sense, a lot of sense, but again, you must pay off the balance in full each month. Failing to pay the balance will only get you right back into debt. Here’s a list of three popular rewards credit cards.
Alternatives to Credit Cards
Debit cards and prepaid credit cards can give you the convenience of credit cards while eliminating the temptation to spend more than you have.
- Secured cards: A Blog/best-secured-câ
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Yep, even one month of not paying off the balance in full could negate a whole years worth of rewards!
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