I've had a credit card ever since I was 18. My first credit card had a credit limit of just $500, which was very manageable. Now, over a decade later, I have several credit cards, and my credit limits are much higher.
Even juggling multiple credit cards – mostly to earn lucrative credit card rewards – I've never once carried a balance on a single credit card. I've never paid a late fee, and I've never paid a penny of interest. Here's how I did it – and how you can do it, too.
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I Regularly Monitor My Credit Card Spending
One key to never carrying a credit card balance is regularly reviewing my credit card spending.
Doing this simple exercise allows me to quickly realize when I'm spending mindlessly.
If I realize that I am wasting money on something like convenience store snacks, I find a way to change my habit and keep that money in the bank. Keeping more of my money by changing my spending habits is critical in growing my bank account, which allows me to spend on things I enjoy and still pay my bills in full each month.
I Reconcile My Credit Card Statements
Each month, I reconcile my credit card statement to my receipts shortly after I receive the statement in the mail. I mark off each purchase on my statement after making sure the amount charged is the same as on my receipt.
While doing this exercise may seem like a pain, it is another way to make sure that I monitor my credit card spending. It also helps me to check for fraudulent transactions and make sure that I'm not paying for someone else's purchases on my credit card.
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I Stay Organized
Organization is key if you want to avoid carrying a balance on your credit. It's easy to accidentally miss a payment if you aren't keeping close track of when your statements come in the mail and when your due dates are, especially once you start carrying multiple credit cards.
To solve this problem, I made a spreadsheet for all of my bills, including credit cards, that list when I receive statements and when the bill due dates are. Each month, I mark off when I pay a bill. I check the spreadsheet once a week to make sure that I haven't missed any bill or credit card payments.
I Never Buy Anything I Can't Pay for in Cash
One of the main reasons that people carry a credit card balance is because they buy more than they can afford. That's why I promised myself I would never buy anything on a credit card that I couldn't theoretically pay cash for that day.
It's easy to buy something you can't afford knowing that payday is just around the corner, but an emergency may pop up, or your hours at work may get cut.
By not spending on items that I don't have cash for, I never put myself in the situation of having to decide whether or not I need to carry a balance on my credit card. If I can't afford it, I simply don't buy it, and that way I can always pay my credit card bills on time and in full.
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Keeping track of credit cards can seem like a pain, but once you have a system down, it doesn't take much time at all. Just spending a few minutes each month to make sure that each credit card statement is accurate and paid on time will help you work toward an excellent credit score.
That credit score is key to saving hundreds – or even thousands – of dollars in the future when you decide it's time to purchase your first car or home. Don't be scared of credit. Master it.