It's a wonder that United States schools don't offer courses to high school students on preventing credit card debt since it is something that can destroy one's life – assuming that person goes overboard with financial spending. As a former credit card strategist, I can attest to the pros and cons of owning a card as well as how large banks make money. I can also attest to how I saw, day in and day out, how credit card fees (particularly interest fees) added up over time. Here are some tips to keep you out of credit card debt.
Pay off your bills each month
This one should be common knowledge, but it isn't. The majority of card owners either pay off the minimum amount each month or some fixed fee. In fact, companies like Chase make this easy by setting up features that make this even easier for you with Chase Blueprint. However, paying off a fixed value or fixed percentage each month means that part of your bill will be accruing interest each month, leaving you with paying more than you receive.
Watch out for annual fees
Many credit companies offer cards that are free for the first month, but hit you with an annual fee going forward. American Express offers great cards, but many of them do have annual fees that will come back to haunt you each year. There are some cards that cost a few hundred dollars each year. If you aren't getting value from your card, make sure to cancel before this fee hits (or call to see if they are willing to waive the fee for another year).
Don't spend more than you actually have (unless there is an emergency)
Listen, I know it is tempting to spend as much as you want, but it isn't reality. You have your own limits and you need to be disciplined enough to adhere to these limits. Keep your wits about you by spending ONLY what you have through credit cards. Use credit to give you instant cash that you will be able to pay back later or use credit cards to accumulate points, but don't use credit to give you money that you don't have.
Follow this advice and you will be on your way to using credit the proper way – with money in your account and credit available to cover your emergency expenses.