Contrary to what you might have heard, credit cards are not evil. There is a way to use your credit card that will not automatically put you in debt as you might fear. Not only that, but there are even many benefits to using a credit card, so long as you use it correctly.
The number one way to ensure you use a credit card to your advantage instead of your detriment is to treat your credit card as if it were a debit card. Here, we tell you just how to do that.
Using Your Credit Card Like A Debit Card
The number one rule to using your credit card like a debit card is to only spend money that you have – not money that you think you will have in a week or month, but liquid cash that is actually sitting in your checking account at the time you swipe your credit card to make the purchase.
If you use your credit card to make purchases you could not otherwise have paid for in cash or with your debit card, you will likely be unable to pay off the balance in full at the end of the month, incurring high-interest fees and potentially digging yourself into a hole of debt.
Three Steps to Using Your Credit Card Like A Debit Card
Step 1: Before you make any large purchases with your credit card, check your bank accounts and confirm that you have enough to cover the amount. It is all too easy to pull up your accounts, so there is no reason not to know – at any given time – how much you have and what you can afford.
Step 2: Pay your entire balance as soon as the new charge hits your account. You do not have to wait until the end of the month, and in fact, it is best to stay on top of your transactions so as to avoid carrying an interest-accruing balance. Not to mention, regularly logging in will help you ensure you always know how much money is in your account.
Step 3: Enroll your credit cars in automatic payments and select the option to pay the balance – in full – every month. This way, even if you forget to make interim payments on your purchases each month, you will be far more likely to pay off your balance at the end of the month (thus avoiding steep fees and penalties).
Why You should use Your Credit Card Instead of a Debit Card
You might be wondering why you should use a credit card like a debit card – why not just use a debit card? There are certain advantages to using your credit card instead of a debit card.
For one, using a credit card helps build up your credit history, adding to the overall health of your credit score. Your credit score is important if you want to get a loan, rent an apartment or any number of things, so building up your score by using your credit card responsibly can be a win-win.
Additionally, credit cards offer certain consumer benefits that debit cards do not, such as consumer protections on purchases and rewards in the form of travel points and miles. While it is generally not advisable to use a credit card just to get these benefits, if you can use your card responsibly and pay it off every month, there is no reason to give up these benefits in favor of using a debit card.
Who should NOT Use a Credit Card in This Way?
If you lack confidence in your ability to control your spending and pay your credit card off, in full, every month, then using your credit card like a debit card is probably not the best plan of action for you. Instead, consider putting down the credit cards entirely until you think you would be able to follow these tips.
If you have already found yourself in debt, consider seeking debt relief before proceeding to use your credit cards again. A debt relief company can assist you in finding options – like credit card debt consolidation – to pay down your debt. Credit card consolidation is even an option with bad credit – you will just need to consult a reputable debt relief company for guidance on finding the right credit card debt consolidation option for you.
Once you have cleared your debt, start on the right foot by beginning to use your credit cards again.