How to use credit cards wisely to avoid debt

cointelegraph.com:

Credit cards may be excellent financial instruments if used responsibly. However, many individuals fall into the trap of collecting excessive debt due to careless credit card usage. This article will cover numerous tactics and best practices to help you use credit cards sensibly, avoid debt and maintain a healthy financial lifestyle.

Credit cards operate as a revolving line of credit, allowing users to make purchases up to a predetermined credit limit. However, failure to comprehend the foundations of credit cards can lead to financial issues. It’s crucial to grasp basic concepts such as credit limits, interest rates and minimum payments to prevent potential traps.

A credit limit is the maximum amount of money that a credit card company permits you to borrow on your card. It indicates the line of credit given to you. It is crucial to understand your credit limit and keep track of your expenditures to avoid exceeding it. Going above your credit limit can result in additional fees and penalties.

Interest rates are the fees that credit card companies charge on any outstanding balance that you carry from month to month. It is crucial to pay attention to the interest rates linked to your credit card, as they can drastically affect the amount you owe.

Here's how you can protect yourself:1) Avoid high interest debt: When you take on credit card debt, you use your scarce resources (time and energy) to work and pay interest at 20%+.2) Holding cash for the short term (3-12 months) is smart because your expenses will likely be…

High interest rates can lead to higher debt over time, while lower interest rates can save you money. To prevent incurring excessive interest charges, attempt to pay off your credit card debt in full each month.