4 Ways to Make Sure You Never Pay Interest on Your Credit Card
Follow these tips to make sure you never waste your money enriching the credit card companies.
- Credit cards tend to have very high interest rates.
- You don’t have to pay interest just for using a credit card.
- Tracking what you spend on your card can help ensure that you’re not paying interest to creditors.
Credit cards generally tend to charge interest at very high rates. The expense associated with paying interest on credit cards is one of the main reasons why some finance experts, such as Dave Ramsey, recommend avoiding using cards.
The reality, however, is that if you don’t don’t pay interest on your credit cards, they can actually help improve your life in many ways, including allowing you to build credit, earn rewards, and enjoy cardholder benefits. The key is to make sure you can pay off your balance before interest kicks in.
So how can you do this? Here are four techniques to help you never put your own finances at risk by paying interest to your creditors.
1. Living on a budget
If you want to avoid having to pay interest on credit cards, you need to make sure that you only charge an amount that you can repay when your account statement arrives. Living on a budget helps you do just that.
When you set a budget, you can make sure that your expenses don’t exceed your income. Since you’ll only charge pre-scheduled purchases to your credit cards and your expenses will stay lower than the paychecks you receive, you should still be able to pay off your balance in full before interest is due. .
2. Keep track of your expenses
Whether you’re budgeting, tracking your spending can also help ensure you avoid credit card interest charges.
Tracking spending on your cards can help you make sure you’re sticking to your budget and not splurging so much that you end up with a credit card balance that you can’t pay off. Knowing that you are tracking spending also makes you less likely to blow your budget because you would be more aware that you are making a purchase that exceeds the spending limits you have set for yourself.
Even if you don’t have a budget, tracking expenses can help you avoid credit card interest. If you keep an eye on how much you put on your cards and make sure you always have enough money in your bank account to pay off your balance, you can easily send your payment before the interest starts to accrue. ‘accumulate.
3. Set up automatic payments
Paying your credit card automatically is a surefire way to avoid interest charges because you can set up your card to have automatic payments for the entire balance taken directly from your bank account. This way, you won’t forget to make a payment or inadvertently have to pay interest, and you won’t be tempted to pay less than the total balance due.
Now, the trick to this approach is to ensure that you never go over your account with an automatic payment. But if you’re tracking your spending and/or sticking to your budget, that shouldn’t be a problem.
4. Review 0% APR options
Finally, if you need to make a purchase that you can’t repay in full, consider a card with an introductory interest rate of 0%. This gives you time to pay off your purchases before interest kicks in.
By following these four tips, you can use credit cards to your advantage while not sending extra money to creditors for interest charges – so using the credit card will benefit you.
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