Eliminating a mountain of credit card debt is a formidable challenge — but not an impossible one. And after you’re finally debt-free, one of these scenarios could occur:
- You learn from your past mistakes and are more cautious and responsible when you use your credit cards.
- Elated at the idea of being out of debt, you start racking up charges once again.
- You become reluctant or even afraid to use credit cards for fear of falling into the same situation.
The first situation is the best-case scenario, but sometimes, it’s one of the latter. While it’s good to learn from your mistakes, you shouldn’t let the fear of debt stop you from using credit cards. As the Motley Fool explains, once you empower yourself with all the financial benefits credit cards offer, making them work for you should be a breeze.
How To Add Credit Cards Back In Your Life
Sometimes, credit cards are necessary. You may not have an emergency fund to cover an unexpected expense or the time to apply for a personal loan. Credit cards can be a useful way to build your credit, which helps you secure better rates and offers. But if you’re paralyzed by your fear of going back into debt, you’ll miss those valuable opportunities.
Not only that, but constant worry can be a detriment to your mental and emotional state. Yes, debt is a stressful situation, but if you don’t have any and you’re still anxious about it, you’re not doing yourself any favors. Being afraid to use credit cards only makes life more difficult.
Establishing a few ground rules for yourself can help you gradually incorporate credit cards back into your life:
- Stick with one card at a time. If you use a credit card that offers a 0% introductory APR for a large expense (such as a new appliance), don’t use any other card until you pay the balance in full.
- Pay your balance twice a month. Using a rewards credit card for everyday expenses (like gas, groceries, dining, etc.) is a great way to save money. But instead of letting the balance accumulate throughout the month, make a note to pay it down every two weeks — or once a week, if you’re feeling proactive. Doing so can give you a sense that you’re the one in control.
- Review your account twice a month. This idea may seem overboard, but it only takes five minutes. Checking your account more than once a month can help you spot irregular purchases (like highway tolls) or catch unauthorized charges.
- Don’t pay interest. As mentioned earlier, credit cards are great for regular, daily purchases. However, the trick is to avoid charging more than you can afford to repay before the end of the billing cycle. The goal here is to avoid interest payments and stay in control of your spending.
The Advantages Of Credit Cards
When you’re up to your ears in credit card debt, there are no benefits. But once you pay it off and stay debt-free for a while, it’s easier to appreciate perks. For example, using one credit card for the things you buy daily helps you track your spending, including where your money goes.
Additionally, paying your balance twice a month (or more) gives you more chances to see your rewards grow. And, speaking of rewards, these points can help you save big. For instance, if you have an airline credit card, you can collect miles that lead to deep discounts on your next trip. Many travel credit cards also provide benefits such as travel insurance, free checked luggage, and cheaper tickets for travel companions.
Credit Cards Aren’t One-Size-Fits-All
Of course, credit cards aren’t ideal for everybody. If you or your spouse struggle to control your spending, you may struggle to pay your full monthly balance or keep your debt-to-income ratio low.
You don’t have to be fearful of credit cards, but you should be mindful (or respectful) of the risks that they can come with.
Some people compare credit cards to calories. While some may think they’re necessary, others might perceive them as a detriment. It can take years to rebuild your financial confidence in yourself after getting out of debt. But once you have it, you can apply that self-assurance in every part of your personal finances.
- George, Dana. “How I Got Over My Fear of Credit Cards.” The Motley Fool, 9 Jan. 2021, www.fool.com/the-ascent/credit-cards/articles/how-i-got-over-my-fear-of-credit-cards/.