Out of all the financial products out there, credit cards can inspire some of the strongest opinions. Some people see them as a useful tool for secure purchasing or even earning rewards on their purchases, while others see them as nothing more than a dangerous debt trap.
As with all things, the trick to how beneficial a credit card can be comes down not just to the product, but how you use the product. Strict credit card management can enable consumers to take advantage of all the benefits of credit cards without falling into debt. The key here, however, is the word “strict.”
Consider using credit cards in conjunction with your budget. In other words, as you set your budget or spending plan for the month, you can use your credit card to pay bills or pay for purchases that you’ve already planned without exceeding what you already planned on being able to repay.
The only way to stay out of credit card debt without avoiding credit cards altogether is to pay the balance in full each month. If you used your credit card in conjunction with your budget, this should be feasible. This might be harder to do if you use your credit card as a supplement to your budget or as an emergency fund.
All that said, things happen, and there might be a time when you simply can’t pay more than your minimum payment. In that case, make sure you always pay on time to avoid late fees.
One such option is called debt consolidation, which is the act of paying off debt with a credit card or loan, ideally at a lower interest rate. Consolidating debt can help you secure low or no-interest credit for a limited period of time (if your credit is good enough to get approved).