The Points Guy believes that credit cards can transform lives, helping you leverage everyday spending for cash back or travel experiences that might otherwise be out of reach. That's why we publish a variety of editorial content and card comparisons: to help you find a great card to turn your goals into reality.
Our site may earn compensation when a customer clicks on a link, when an application is approved, or when an account is opened with our partners, and this may impact how or where these products appear. While we don't cover all available credit cards, our editorial team creates and maintains all of the analysis of these cards, and our content is not influenced nor subject to review by any credit card company, bank or partner prior to (or after) publication. Please view our advertising policy and product review methodology for more information.
Advertiser disclosure
The Points Guy believes that credit cards can transform lives, helping you leverage everyday spending for cash back or travel experiences that might otherwise be out of reach. That's why we publish a variety of editorial content and card comparisons: to help you find a great card to turn your goals into reality.
Our site may earn compensation when a customer clicks on a link, when an application is approved, or when an account is opened with our partners, and this may impact how or where these products appear. While we don't cover all available credit cards, our editorial team creates and maintains all of the analysis of these cards, and our content is not influenced nor subject to review by any credit card company, bank or partner prior to (or after) publication. Please view our advertising policy and product review methodology for more information.
Katie Genter is a digital nomad who has traveled full time since June 2017. She writes and edits stories about points and miles, and loyalty programs, often letting her personal experiences color these stories.
October 31, 2024 • 7 min read
The cards we feature here are from partners who compensate us when you are approved through our site, and this may impact how or where these products appear. We don't cover all available credit cards, but our analysis, reviews, and opinions are entirely from our editorial team. Terms apply to the offers listed on this page. Please view our advertising policy and product review methodology for more information.
Editorial note: This post has been updated with new information
Editorial disclaimer: Opinions expressed here are the author's alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.
Comments
By commenting, you agree to our Community Guidelines to help create a positive space for conversation. The responses below are not provided or commissioned by the bank advertiser, our partners, or The Points Guy (“TPG”). They have not been reviewed, approved, or otherwise endorsed by any of these parties. All responses are submitted by individual contributors, and neither the bank advertiser, our partners, nor TPG are responsible for ensuring that all posts and/or questions are answered.
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Quick summary
Responsible use of credit cards is essential to avoid debt and maximize travel rewards.
Key strategies include treating cards like cash, setting a budget, and building an emergency fund.
Paying your statement balance in full each month helps prevent interest charges and financial strain.
Monitoring expenses and recognizing early warning signs can help maintain financial health.
What to consider
Establishing an emergency fund with three to six months' expenses is recommended for financial security.
Setting up autopay can help avoid missed payments, but regular transaction reviews are still important.
Identifying and reducing unnecessary expenses is crucial if your income cannot cover your outgoings.
What you'll miss from the article
A step-by-step guide to six practical rules for staying out of credit card debt while benefiting from rewards.
Generated by AI with support from our editorial team.
Many consumers struggle with credit card debt. Even TPG’s founder and CEO Brian Kelly struggled with debt when he first dabbled in the world of credit cards.
However, it is possible to use credit cards without getting into financial trouble. It's critical if you’re looking to maximize your travel through points, miles and rewards credit cards.
For many consumers, using cash to pay for an item or service that costs more than $100 causes a greater amount of emotional pain than handing over a credit or debit card. It can be tempting to use credit cards, especially credit cards with a 0% introductory APR, as a tool for deferring payment for something you want now but can’t afford.
However, it’s crucial to stay out of credit card debt. If you avoid making purchases that you wouldn’t — or couldn’t — make using funds in your bank account, you’ll increase your chances of staying debt-free.
If you’re looking to stay out of credit card debt, it’s essential to make a budget and follow it.
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Creating and using a budget allows you to:
Evaluate and improve your spending habits
Determine how large of an emergency fund you need (more on this in the next section)
Calculate how much income to save
Spend within your means
There are many budgeting techniques that you can use, so select the one that suits your spending habits. At a high level, you’ll need to decide how to split your income between your needs, wants and savings. You may also need to identify expenses you can reduce or eliminate if there’s not enough income to cover everything.
You never know when you may face unexpected expenses. For example, you might incur unanticipated medical bills. Or, you might lose your job and need to rely on savings while looking for work. For these reasons, it’s crucial to have an emergency fund.
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An emergency fund is a safety net that you can use to pay for unplanned but necessary expenses that you otherwise can’t afford. Ideally, you’ll build up your emergency fund and never use it. Should you find yourself in an unexpected situation where money is tight, though, it can help you stay out of credit card debt. After all, you can use your emergency fund to cover expenses in a pinch.
Financial planners usually recommend setting aside three to six months' worth of expenses in your emergency fund. Depending on your situation, you may want to keep more or less in your fund. Of course, if you need to dip into your emergency fund, you should always restock it as soon as possible. If your monthly expenses increase, it’s wise to add to your emergency fund accordingly.
To avoid credit card debt, pay your statement balance in full each month on or before your due date. Doing so will prevent interest from being charged on your account.
Should you struggle to pay your balance in full, pay at least the minimum balance due by your due date. Doing so will prevent late fees and penalty interest rates, but you’ll still accrue interest on the remaining balance. You’ll want to pay down your account balance to $0 as soon as you can to get out of credit card debt.
If you incur more expenses than your income can support, you may find yourself in credit card debt. However, by making a budget, you can identify areas where you can reduce or eliminate expenses.
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You may be able to save big by reconsidering some of the largest expenses in your budget. For example, using public transportation and ride-hailing services instead of owning a car can go a long way in saving you money. Or, maybe your family can get by with one car instead of two. Likewise, you may be able to move to a smaller home, apartment or condo — or to a less expensive area where home prices are lower. By making some difficult decisions, you can drastically reduce your expenses.
By commenting, you agree to our Community Guidelines to help create a positive space for conversation. The responses below are not provided or commissioned by the bank advertiser, our partners, or The Points Guy (“TPG”). They have not been reviewed, approved, or otherwise endorsed by any of these parties. All responses are submitted by individual contributors, and neither the bank advertiser, our partners, nor TPG are responsible for ensuring that all posts and/or questions are answered.
