Money management

How to use a credit card without getting into debt

06 September 2021 | Posted by Frankie Jones

Many of us are taught from a young age that credit cards are dangerous and will only lead to unmanageable debt. But if you use them well, credit cards can be useful for managing cash flow, giving you protection and even boosting your credit score. 

You just need to know the tricks for using credit sensibly and to your advantage.

1. Only spend within your means

Rule number one: when you go to buy something, ask yourself if you could afford it without a credit card. If the answer is “no”, don’t buy it. Simple as that. The likelihood is that if you can’t afford it this month, you probably won’t be able to afford it next month. Unless you’ve been given the heads up that you’re about to win the lottery…

If you struggle with overspending, ask your bank to lower your credit card limit. While this can temporarily harm your credit score, it might be worth it in order to stop you from splashing your cash. The exception for this is if you’re regularly maxing out your credit limit. Avoid lowering it as this can affect your credit utilisation.

To keep a hold on your spending, create a budget that works for you. With Claro’s free budget planner, you can identify areas to cut back on spending. Then, you can put this money towards any credit card debt that needs paying off.

2. Have an emergency fund at the ready

Try not to rely on credit cards or payday loans to fund those unexpected expenses. For example, when your boiler gives up or your car breaks down.

It’s best to have an emergency fund set aside – usually 3 months’ worth of expenses – that you easily access at times like these. That way, you can stick to using your card for buying that sofa for your new home, or renting a car abroad. In fact this is something that normally requires a credit card, and you don’t want to be caught short when you’re abroad!

3. Repay your credit card debt every month

Just paying the minimum on your credit card balance each month is a sure-fire way to land yourself in spiraling debt. With the average credit card carrying an interest rate of 22%, it’s easy to see how this could happen. We suggest you set up a monthly Direct Debit to pay your balance in full. That way, the money will be taken without you noticing and you won’t need to worry about missed payments.

If repaying your full balance isn’t possible, try to pay at least a bit more than the minimum amount. If this becomes a regular occurrence, see if you can switch your credit card to a deal with a lower interest rate. You could also try a balance transfer card. 

4. Use just one credit card

When it comes to credit, “the more the merrier” doesn’t usually apply. The more credit cards you have, the more you’re likely to be tempted to spend – especially if you consider credit to be “free money”.

This will work in your favour especially if you have a card that offers an introductory 0% interest period. Don’t forget to take advantage of this! Having just one card at your disposal will also make it easier to politely decline credit card offers when you’re out shopping or browsing online.

5. Check your rewards program 

Lots of cards come with rewards, which encourage you to spend. So make sure any spending you use the card for is worthwhile. For example, buying a pair of trainers you don’t need purely because of the irresistible cashback offer might not be such a good idea. But if you’re already planning a long-haul holiday and can claim Airmiles for your flights, it might make sense.

Struggling with credit card debt? Don’t worry, there’s plenty of free, expert help out there. Get in touch with StepChange or Citizens Advice to find out what to do if you can’t make your repayments. 
Plus, remember to pay off any high-interest debt before you consider saving money.


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