Although credit cards are a convenient way to pay for online and offline purchases and can provide funds for financial emergencies, maintaining high credit card balances can negatively impact your finances. Interest paid on credit card balances takes away from your financial ability to save for retirement, education and other expenses. Simple strategies can help you keep your credit card balances low and avoid spending a significant portion of your income on interest payments.
Instructions
- 1
Use your bank's debit card as your primary card for everyday purchases, such as groceries, gas and restaurant meals. Most stores that accept credit cards also accept bank debit cards--because a debit purchase deducts money you already have in your account, it prevents you from having to pay interest on your purchases later.
2Pay for purchases with cash whenever possible. Paying with cash not only eliminates the risk of racking up high credit card balances; it can also help you evaluate potential purchases more closely. You might decide you don't really need an item--skipping a purchase leaves more of your income for savings or paying down your credit card debt.
3Leave all but one of your credit cards at home when you head out on vacation or a shopping trip. Paired with a bank debit card, a single credit card will give you the purchasing power you need for a trip without increasing the temptation to indulge in impulse purchases.
4Consolidate your credit card balances on a low-interest card or line of credit. This reduces the amount of interest you pay and allows you to make only one unsecured debt payment per month, allowing you to pay more toward your debt.
5Review your budget each month to make sure you can make your credit card payments on time. If your budget becomes tight, you may need to reduce discretionary spending to meet your payment obligations. If you miss a credit card payment, the lender can charge you late fees and raise your interest rate, which can elevate your account balance.
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