This Is the Biggest Reason I Won't Ever Carry a Credit Card Balance

I love using a credit card to buy just about everything. I have a great rewards card and I earn tons of cash back that I'm able to invest to help me grow my brokerage account balance. I also appreciate the purchase protections that my card provides me.

Although I charge everything I can on my credit cards, I will absolutely never carry a credit card balance. And there's one key reason why that's the case.

I won't carry a credit card balance for this simple reason

The big reason why I am unwilling to carry a credit card balance is that I don't want to commit my future self to paying for things I am enjoying today. Especially since, with credit cards charging an average interest rate of 20.68% as of July 10, 2023, I would be forcing my future self to pay an inflated price for the goods and services I am using now.

I know that in the future, I may have other plans for my money. I may want to go on vacations, buy things for my kids, or even dine out at fancy restaurants. And if I have set myself up to be forced to make high payments for the things I'm enjoying today, I may not be able to do those things.

It simply does not make sense to me to cut off future opportunities by delaying the bill for what I'm buying today. Especially because I don't know what my life will look like in the future. The payments could become a burden that makes it impossible to live within my means and traps me in a cycle of debt and that is simply not a risk I am willing to take. 

Here's how I avoid carrying a credit card balance

Since I am committed not to carrying a credit card balance, there are a few things I do to make sure that doesn't happen. 

First, I keep tabs on what I'm spending. I don't have a super detailed budget anymore because I found that frustrating, but I instead keep my fixed expenses to 50% of my income and my discretionary spending to 30%, while saving the remaining 20%. 

Since I charge some fixed expenses to my card as well as some discretionary spending, I know roughly how big my card balance should be each month in order to stay within my limits. I sign into my online account a few times a week to make sure I'm not getting close to that limit. If I am, I start to make some cuts and am a lot more careful with my spending.

The other thing I do is set up automatic payments for my full card balance. Each month, the entire amount I owe comes out of my checking account so there's no chance I'll carry a balance. Since I keep tabs on my card spending and have a little cash cushion in my checking account, I can do this without worrying about overdrafting.

These techniques enable me to reap all the benefits of using a credit card -- without those pesky interest rate charges that could limit my future opportunities.