3 Ways I Avoid Carrying Credit Card Balances

Here's how I get to enjoy credit cards without the downside of racking up interest.

Credit cards have a lot of benefits. Not only are they convenient, but they also allow you to rack up cash back and rewards on the purchases you're already making.

But there's a clear downside to using credit cards. If you rack up a balance you can't pay in full by the time your bill comes due, you'll be charged interest on any sum you carry forward. And the longer you carry a credit card balance, the more money you'll lose to accrued interest.

Paying interest to my credit card companies is something I want to avoid at all costs, so I make a point to pay off my cards in full every month. Here's how I'm able to do that.

1. I stick to a budget

My family follows a budget that allocates money for everything from weekly groceries to gas fill-ups to the occasional haircut. Having a detailed, comprehensive budget allows us to keep our spending in check and avoid charging too much on our credit cards.

Not only do we have a budget, but we sit down to review it every few months as our earnings and expenses evolve. This year, for example, we've been spending more on gas and groceries due to inflation. We've already made changes in other spending categories to accommodate that necessary shift.

2. I check my credit card balances every week

Some people wait until their credit card bills are due to check their balances. But I like to check mine every week. That way, I can make sure I'm not overspending. If I see that I have overspent, it gives me a heads-up to scale back until my next billing cycle.

Sometimes, checking my credit card balances weekly alerts me to charges I wasn't expecting. My children attend summer camp, and I'd forgotten that I'd signed up last year to pay that tuition in installments from January through May. Earlier this year, I signed onto one of my credit card accounts and saw a $1,500 charge I wasn't expecting. I'm really glad I did, because I'd forgotten about it and had to put the brakes on another larger purchase to account for it.

3. I load up my emergency fund with extra cash

The purpose of my emergency fund is to bail me out when unexpected bills land in my lap. But having a decent chunk of cash in savings also makes it so I'm less likely to need to carry a credit card balance. If an unanticipated expense, like a home repair, arises, and I charge it on my credit card to score reward points or cash back, I can dip into my savings to pay my balance before interest accrues on it.

Sometimes, carrying a credit card balance is unavoidable. But there are steps you can take to lower your chances of having to spend money on interest, like following a budget, checking your balances frequently, and making sure you have cash reserves to fall back on.