I've Never Carried a Credit Card Balance Because I've Followed These 3 Rules

by Maurie Backman | Updated July 21, 2021 - First published on Sept. 2, 2020

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Here's how I've stayed debt-free.

When I first applied for a credit card, I was fairly young and a little nervous. The reason? I knew that having a credit card would open the door to temptation. At the time, I was a relatively broke college student with little income, and the bulk of that went to tuition.

Once I graduated college and got a real job, the idea of a credit card scared me less, since I knew I was in a much better position to manage it. But I'm happy to say I have never once carried a balance on a credit card. I've always paid my entire bill by the due date, so I've avoided throwing money away on credit card interest.

I pulled that off by sticking to a strict set of rules I set for myself early on. Here's what they are:

1. Don't charge more than you can afford

Some people take a look at their credit limit and think, "Cool! Now I get to spend this much and worry about it later." That's a bad idea. Rather than pay attention to my credit limit, I instead focused on what my earnings and bank account balance looked like. From there, I'd know that I could charge a certain amount and still pay it off when my billing cycle was up.

2. Always have emergency savings

Some people rack up credit card debt because they spend recklessly. Others land in debt simply because life throws some nasty unplanned expenses at them and, without enough savings, they're forced to put them on a credit card. One thing my parents instilled in me was to always have money on hand for emergencies. So I've made a point of having at least six months' worth of essential expenses in my savings account.

Of course, I've had my share of unanticipated expenses -- home repairs, car repairs, you name it. But having emergency savings has helped me avoid whipping out a credit card and running up an unpayable balance.

3. Keep tabs on your spending

When you pay for purchases in cash, you see money leaving your wallet. When you charge things on a credit card, it's not like you notice that a large chunk of your cash is missing. It's easy to let that kind of spending get out of hand. I've always made it a point to check my credit card balance every few days. That lets me know how much I've spent to date, and how much more I can afford.

Incidentally, checking my spending frequently has also helped me spot fraud early on. Last year, someone got one of my credit card numbers and spent $300 with it. I caught the charge while it was still pending, and got the merchant to cancel it before it went through.

It pays to avoid credit card debt

Credit card debt isn't just costly; too much of it can hurt your credit score, making it more difficult and expensive for you to borrow money if you need to. If you're racking up credit card balances and losing money to interest payments, it's time to break that cycle. And if you stick to these rules, there's a good chance you will.

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