The wealthy receive interest. The poor pay it. If you’re anything like me (probably are if you’re reading this blog) you want to be wealthy. So the following post describes how I’ve never paid a cent in credit card interest. I never will either, as long as I keep using the strategies outlined in this post. Let’s get started making sure you never have to pay a pound in interest!
Make It Automatic
There’s a book I’ve read called The Automatic Millionaire. The author talks about how motivation comes and goes. If you become unmotivated in regards to your finances, that can be dangerous! So what does a person do? Well, a person makes their finances automatic.
You may already be using bill pay. So why not use automatic credit card payment. It’s what I do. Upon receiving a credit card, I connect it with my bank account. I set the payment to be automatic, as soon as the bill comes due each month. Easy peasy. The only thing I ever have to monitor is if I have enough money in my account to cover that month’s purchases. I make that part automatic by always having more in my account that I would ever spend on my credit card in a month. Automatic. Make things automatic. Then you can focus on what really matters in life.
Make Sure the Card Gives a Grace Period
Nearly every credit card offers a grace period, whether you think about it or not. The grace period is typically 30 days. It’s a cycle. It basically means you can go 30 days without having to pay any interest at all. This is how you avoid interest. You use your grace period and then pay in full once it ends.
Unfortunately, there are credit card companies which offer a very, very tiny grace period. It makes it virtually impossible for someone to avoid credit card interest.
Some scammy cards are usually aimed at those with a poor credit score. They know these people have a hard time paying, thus they capitalize on them. I recently read a mail offer for one such card. A person would have to send payment every 3 days in order to avoid interest. And they made it very hard to make the process automatic.
Most people assume a card gives them 30 days to pay. Make sure this is true of your credit cards. Otherwise, you’ll likely have to pay interest each month – no matter what!
Make a Game out of It
You may be thinking right now, “Well if he has enough in his bank account each month, why is he even using a credit card?” Worthy question. The reason I do is so I can build up my credit score. And also to receive rewards points. And also for the many, many perks a credit card involves. If you don’t have enough money to pay in full each month, stop reading this post. Go make more money each month. Once you have more income, come back to this post.
Still reading? Good.
How I make a game out of this whole credit card stuff is I monitor my credit score closely. I make a game out of it. I want it to always be improving. The higher it goes, the happier I am. This is definitely a long-term gain. Some months, your score may go down without you realizing why. Many things go into making a credit score. There are so many variables, it’s not worth figuring it out. Instead, focus on the long-term game. Make sure your score is always going up over time. There are many credit cards which will show your credit score. There are many other free ways to monitor your score out there. You don’t need to pay.
Let’s say you could theoretically pay zero in interest but you spend too much to do so. Find ways to reduce your monthly spending. Do whatever necessary to spend less. Challenge all of your expenditures. Do you really need two cars? Maybe you have a habit of shopping online for senseless things when you’re bored. Maybe you could switch to water instead of drinking sugary drinks. That would be good for your wallet and your health.
This is where most personal finance bloggers would tell you to set up a budget. I hate budgets with a passion. Never will I pretend I’m a child and restrict my spending in such a way. And even if I wanted to embrace budgeting, that would be quite a boring way to go through life. So instead, I just think long and hard before making a purchase or subscribing to a service – or whatever it may be.
If you want to avoid interest, avoid overspending.
Only Use Your Card for Certain Purposes
Maybe your credit card statement varies month-to-month. This makes it hard to make sure you have enough in your account to cover the amount. That’s understandable. So instead of trying to pay everything with your credit card, simply pay for one or two categories. Some people I know only use a card when online shopping. I had a friend in college who used it for textbooks. Another girl I know only uses it for monthly staples such as fuel and food. Do whatever you need to do in order to make sure you can cover the balance in full each month.
Get a Card with an Interest-Free Period
Many cards out there offer an interest-free period. You can get a card such as this, use it for months, pay it off finally and never pay a cent in interest. You can read online about some people who do this over and over again. I won’t judge this approach, but if you want to go without paying interest, this will work indefinitely.
Enjoy the Savings!
Never paying interest is a wonderful feeling. As long as you pick the right card, make things automatic, make a game out of it and don’t spend more than you can, you should be just fine. Enjoy becoming wealthy!
Will Lipovsky is a personal finance freelance writer and internet marketer. His most embarrassing moment has been saying to a Microsoft executive, “I’ll just Google it.” You can get in touch with Will at FirstQuarterFinance.com.