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Avoiding Credit Card Debt

Credit cards can be very useful. They’re more convenient than carrying cash, they can help you earn rewards points on your purchases, and they make it possible for you to buy items when you don’t have the money available right now. However, anyone who has a credit card is at risk of getting into trouble with credit card debt.

Overspending on a credit card is easy. You can quickly swipe and tap and buy without feeling like any money is out of your account. And then you get the bill. Getting out of credit card debt is very difficult. Many credit cards have very high interest rates, which makes it hard – and expensive – to repay what you owe if you can’t pay it all off at once. Therefore, it’s best to avoid getting into credit card debt trouble in the first place.

Here are some tips for avoiding credit card debt issues.

Have an Emergency Fund

One way that a lot of people get into credit card debt problems is by using their card to pay for an unexpected expense. For instance, if your car breaks down and you need to do a repair or if your roof starts leaking and you need to get it fixed, you might use your credit card to pay for this expense.

However, if you don’t have any money saved for emergencies, it will be difficult for you to pay your credit card bill when the time comes.

To avoid these situations, put aside money each paycheque. Place this money into a separate account that you only use for emergencies. Even if you can only put aside a small amount, it’s better than nothing and it will grow over time. When you have an emergency fund, you won’t need to go into debt when an unexpected cost comes up.

Keep Track of your Spending

It’s very easy to lose track of how much you put on your credit card each month. When you pay with cash or use debit, it’s not easy to spend more than you can have. However, when you use a credit card, that’s a lot easier to do.

This is why it’s important to keep track of what you spend. If you can check your credit card transactions online, you should do so frequently. This will help you keep track of what you’ve spent so that you don’t go over budget. Many credit cards also allow you to check your credit card balance over the phone, if this is what you’d prefer to do. It also helps to use an app, a spreadsheet, or a pen and paper to write down what you spend.

Don’t Miss Payments

When you miss a credit card payment, you’re charged interest and likely a late fee as well. This makes it more difficult to pay down your debt. Place reminders in your calendar to pay off your credit card bill before it’s late and stick to this schedule to save money and help your credit rating.

Pay as Much as You Can Afford Each Month

If you carry a balance on your credit card, you’ll be charged interest. The higher balance you have, the more interest you’ll be charged. The ideal situation is to repay your entire balance each month. This will keep you from being charged interest and keep you out of credit card debt.

However, if you can’t afford to pay off the entire balance, try to pay as much as your budget allows. If you only make the minimum payment each month, you’ll end up paying a lot of money in interest and it will take you a very long time to pay off your credit card debt.

Try Not To Use Too Many Cards

The more credit cards you have, the more likely you are to use them. This makes it easier to lose track of your current balance and spend more than you can afford to repay. For most people, it makes sense to stick to one or two credit cards, but there isn’t a “right amount” of cards that you should have. Do what works for you, just be aware of how much you are charging to your cards.

Avoid Saving Your Credit Card Info

A simple way to avoid overspending is to not save your credit card details on websites, apps, and other tools. If you have to get up, go into your wallet, and dig out your credit card every time you want to buy something, you’ll be less likely to make impulse purchases that don’t fit into your budget.