If you're looking for a convenient way to pay for purchases, earn rewards, and track your spending, a credit card might be your best bet. By using your credit card for everything you buy, you can rack up cash or travel rewards, create a paper trail that shows where your money is going, and never have to carry around a wad of cash again.
And thanks to the fact that the majority of top credit cards offer zero percent fraud liability, you won't be on the hook if someone steals your card and runs up charges, either. Sounds like a pretty good deal, huh?
Unfortunately, all of these benefits come at a huge financial cost if you don't pay your credit card bill in full every month. Why? Because card issuers charge credit card interest for each dollar you borrow – and that interest can add up fast if you don't watch it.
How to Avoid Paying Credit Card Interest
While credit cards offer more benefits than any other form of payment, credit card interest is the price you'll pay if you carry a balance. In that respect, avoiding credit card interest is fairly simple. To avoid paying interest on your purchases, you need to pay your credit card bill in full every single month.
That may be easier said than done, but that doesn't make it impossible. Here are a few tips that can help you avoid credit card interest when you're just starting out with a new credit card:
- Only charge what you know what you can afford to repay each month. Before you make a purchase with your credit card, take a peek at your bank account and make sure you have the funds to pay it off right away. You can also use your card sparingly at first – at least until you get in the habit of paying your bill off each month.
- Pay your credit card bill several times per month. If you're worried you'll accidentally carry a balance from month to month, you can avoid that situation by paying your credit card bill several times each month. Since doing so will force you to take stock of how much you have spent periodically, this strategy can also help you stay on budget.
- Set your credit card bill on auto-pay. If you're not worried about overdrafting your account, you can also set your bill on auto-pay. With auto-pay, your bill will be paid automatically from your bank account via electronic check.
How to Avoid Credit Card Interest if You Already Have Credit Card Debt
If you have credit card debt already and want to avoid paying any more interest than you already have, you might want to consider transferring your balances to a balance transfer credit card that offers 0% interest for an introductory period of 12 – 21 months.
By securing 0% intro APR for a limited time, you can save money on interest and get out of debt faster. Just remember that interest will start accruing once your card's 0% introductory offer ends. So if you want to avoid paying interest from this point on, you'll need to pay your balance off in its entirety during this timeframe.
Also keep in mind that some balance transfer credit cards charge a balance transfer fee equal to 3-5 percent of your transferred balance. While you can still save money on interest by transferring your balance to a 0% APR card, you should take this fee into account.
If you want to avoid paying a balance transfer fee completely, you can also consider the Chase Slate® since it charges $0 intro fee for balance transfers within the first 60 days of account opening. Since you'll also score 0% intro APR for 15 months on purchases and balance transfers, this card is an exceptional deal. Best of all, it doesn't charge an annual fee, either.
Using a credit card is a smart way to earn rewards and simplify your life, but only if you can pay your bill in full and avoid credit card interest altogether. The best way to do this is to know your own limits, get in the habit of paying your credit card bill frequently, and keep close tabs on your spending throughout the month.
Credit cards can be your friends or your mortal enemy depending on how you use them. If you want to avoid debt and the credit card interest that comes with it, approach your use of credit with as much caution and self-restraint as you can muster. At the end of the day, your pocketbook will thank you.
Disclaimer: This content is not provided or commissioned by the credit card issuer. Opinions expressed here are author's alone, not those of the credit card issuer, and have not been reviewed, approved or otherwise endorsed by the credit card issuer. This content was accurate at the time of this post, but card terms and conditions may change at any time. This site may be compensated through the credit card issuer Affiliate Program.