How to Minimise your Credit Card Usage to Avoid Debts?

Reduce credit card debt

Before you buy a credit card, know what you are getting yourself into. It is advisable to have credit cards only if you believe yourself to be a wise spender. If you are someone who can’t control your expenditures, credit cards are the easiest way to get you neck deep in debts. Still, they are a most convenient things to have since you get flexible payment options. Look around and find the lowest interest rates among various companies before you get yourself one. If you know how to use them right, credit cards can be your savior friend.

  1. Use a card with a minimum credit limit.

If you have a card with a large credit limit and you do not need it, talk to the bank and reduce the limit. Chances of fraud are greater while using credit cards, so it is important to be careful. Thus the damages, if any, will be minimum. If you are someone who cannot balance your income and expenses, it is highly advisable to restrict your credit limit to a minimum. This will make a huge difference in the long run.

  1. Don’t spend to earn points.

Most credit card companies offer points on their purchases. While it is good to earn them, it is not advisable to spend credit card balance on things for the purpose of earning those extra points. At the end of the month, you might not always be able to pay back the full amount. This could mean to more money spent on paying back interests and increased debts.

  1. Avoid taking cash advances.

Unlike regular purchases, cash advances charge you interests from the day you take the advance to the day you pay back in full amount. This will mean that you might be paying back twice the amount you took in the first place. If you do not have credit balance, use a debit card instead or your savings, other than taking cash advances.

  1. Set a budget for yourself and stick to it.

As soon as you buy a credit card, plan ahead and set yourself monthly limits. This will help you keep your resolution to save money. Monitor your expenses each month so you can improve on your savings habit,  once a while. This will also help you tonot repeat  unnecessary expenses. Just because there is a credit card available , you shouldn’t  buy things which you can’t actually afford.

  1. Pay off the balance monthly

Paying off your monthly credit card balance is a healthy habit. It will help you avoid unnecessary expenses. Monthly payments will mean that you won’t have to pay back interests. This will also help you maintain a good credit score. It can be useful at a later point in life to have a good credit score because it will show you are a responsible borrower. In future, such an impression will improve you chances of getting loans or credits cards easier, in case of emergencies.


Anum Yoon is the founder and editor of Current on Currency. She loves all things personal finance, which is why you'll find her work all over the PF blogosphere.