avoid credit card debtUpdated: November 20, 2019

While a credit card can come with many rewards and perks, one common concern is the possibility of getting into debt. Being tentative is understandable, but with some responsible financial tactics, you’re less likely to build up debt through your credit card usage. Let’s go through some rules to live by in order to avoid credit card debt.

Tips to staying out of credit card debt:

Budget your credit card purchases

When you have a credit card, the temptation of being able to borrow credit to make purchases can be enticing, so it may become easy to accidentally spend more money than you can afford. To avoid credit card debt, be cognizant of your spending and what you’re able to pay back. In other words, don’t make a purchase unless you know you’ll front the bill when the time comes.

Use a credit card for things like your monthly bills or groceries, two necessities that you’ll be paying for anyway. By doing so, it’s easier to ensure you won’t overspend and be left with guilt later. It should be noted that the exception to this rule is a card with a 0% introductory APR.

Low APR cards allow you to avoid interest for a set period of time, which means it won’t cost you an arm and a leg to carry a month-to-month balance in your account. While you may not have to pay off the full amount right off the bat, be sure to budget your payments in order to pay off the balance before the 0% intro APR window closes.

The key to only spending what you can afford is to create a budget. For starters, budgeting allows you to track your financial habits and makes it easier to identify non-essential purchases. By removing these unnecessary expenses, you can save money for necessary spending like taxes or contributing to your savings account. For more budgeting tips and tricks, read our guide to creating a budget that works.

Make timely card payments

It’s crucial to pay your credit card bills on time if you want to avoid credit card debt. Missing credit card payments can cause some serious consequences — such as late fees and penalty APRs — which will only increase your debt. By paying on time, you can ensure that your outstanding payments won’t pile up and can avoid penalty interest fees. If you need help remembering your credit cards’ due dates, note them in your calendar and include them in your budget. Additionally, look to set up automated monthly payments or payment reminders with your credit card issuer, as most offer these services.

Make an effort to pay your balance in full

To avoid credit card debt, you’ll want to pay off your balances in full each time a credit card bill comes along. It may not always be possible, but by doing so, you’ll completely avoid being charged interest on your account. As long as you make sure to budget for any purchases you plan to make with the card, you should have no problem paying it in full each month.

If you’re already in debt, you may not be able to pay your credit card balance in full. A budget can help you determine affordable payments each month and remediate the problem. It may make sense to complete a balance transfer in which you transfer your debt to a card with a 0% intro APR period. Doing this can help you avoid paying interest on your debt in order to concentrate on paying the balance down.

Know the details of your credit card

Another step you can take to avoid credit card debt is to fully understand the terms of your credit card, such as fees, penalties and APRs. You don’t want to be caught off guard by a spike in your interest rate or a surprise charge to your account if you start to carry a balance, so be sure to take time to review.

It’s important to note that credit card terms may be changed and updated. Because of this possibility, you may want to keep tabs on the terms, ensuring that you always have an up-to-date understanding of them. If you’re not sure what to look for, our guide to reading credit card agreements spells it out for you.

Prepare an emergency fund

When certain unexpected situations (such as medical emergencies) arise, you may find an influx of large bills piling up on your plate. If you don’t have enough money on hand to pay off these bills, it can be tempting to charge the fees to your credit card. To prevent yourself from going into debt, we recommend opening a savings account for emergencies that will give you the ability to withdraw money in times of need.

Credit card debt can be an unfortunate reality of credit, but if you use your credit card responsibly, you can hopefully avoid it. Follow our personal finance blog to learn more about managing your finances the right way.

Disclaimer: This content is not provided or commissioned by the credit card issuer. Opinions expressed here are author’s alone, not those of the credit card issuer, and have not been reviewed, approved or otherwise endorsed by the credit card issuer. This content was accurate at the time of this post, but card terms and conditions may change at any time. This site may be compensated through the credit card issuer Affiliate Program.