In our quest to make the most of our expenses, my wife and I decided to utilize a credit card that rewarded us with points for every purchase. Eager to capitalize on this opportunity, we committed ourselves to paying off the balance in full each month, determined not to incur any fees. However, an unforeseen challenge taught us a valuable lesson about managing credit card payments to avoid sinking into hidden debt.
According to several studies, Utah is on the high side of credit card debt per person so we wanted to be extra careful.
As conscientious payers, we diligently focused on settling the balance reflected in our monthly statements. Little did we know that, on occasion, we unintentionally missed paying the entire amount. Some charges, due to the timing of the transactions, fell outside the scope of our monthly statements. This seemingly innocuous oversight allowed charges to accumulate until they surpassed the interest-free time period, leaving us shocked to discover a significant amount of debt building up behind the scenes.
It was during a careful review of our credit card activity that we stumbled upon the root cause of our unexpected debt. We discovered that paying only the minimum balance and neglecting charges that fell outside the monthly statement window was a recipe for financial trouble. It was then that we realized the importance of not just paying the balance from our monthly statement but settling the entire balance from the credit card registry.
The key to avoiding the pitfalls of hidden debt lies in paying off the entire balance from the credit card registry. The registry, akin to your bank statement, can be easily accessed through the credit card webpage. By adopting this approach, you gain visibility into every transaction, ensuring that even those falling outside the monthly statement are accounted for.
Thankfully we had some savings to pay back the unexpected debt and now that we are paying from the registry we seem to be back in control.
What do you financial wizards think? Are we doing alright or do we need to cut up our credit cards and avoid charges altogether?
Causes of Credit Card Debt
Gallery Credit: Dr. T