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keep out of credit card debt

Tips for Staying Out of Credit Card Debt

Credit card debt is incredibly difficult to get out of. Most credit cards charge very high interest rates and, once you owe a lot of credit card debt, it becomes very difficult – and very expensive – to pay it off. Many people who owe a lot on their credit cards are only able to make the minimum payments on their debt. If you end up in this situation, you’ll wind up taking a very long time to pay off your debt and doing so will be incredibly costly.

Since getting out of credit card debt is so challenging, it’s a good idea to take steps to avoid getting into credit card debt trouble in the first place.

Only Charge What You Could Pay for With Cash

While credit cards give you the ability to buy now and pay later, a good way to avoid debt trouble is to only charge purchases on your card that you can afford to buy with the cash you currently have. Buying something on credit that you don’t have the money for (and hoping that you’ll have the money when the bill comes) is a dangerous game and one that can lead to trouble.

Keep Track and Follow a Budget

You should always know how much you owe on your credit cards. Set a limit that you can afford to repay and stick to a budget so that you can stay within this number and afford to make the payment when it comes due.

Whenever you charge something on your card, make sure it fits into your budget and that you’ll be able to pay it off. Paying your full balance each month will help you avoid the high interest costs that many credit card companies charge. If you can’t pay the full balance, pay as much as you can and then adjust your budget (and your spending) so you can pay the bill off in full next month.

Limit the Number of Credit Cards You Have

The more credit cards you have, the more tempted you’ll be to use them. And the more tempted you are to use them, the more likely you are to get into debt trouble. To avoid this issue, don’t apply for too many cards (this includes department store cards) and, if you have a lot of cards, leave some at home when you go shopping. You may even wish to consider cancelling some cards (though cancelling an old credit card could potentially harm your credit rating, so do so carefully).

Avoid Cash Advances

Cash advances are one of the most expensive ways to use a credit card. While getting some cash quickly can be very convenient, this convenience comes at a high cost. There’s typically no grace period on cash advances, which means you’ll start paying interest on this loan right away. On most cards, the interest rate on a cash advance is higher than on a typical credit card purchase as well.

If you’re following a budget and living within your means, you won’t need to get a cash advance to make ends meet.

Don’t Miss Payments

While it’s a very good idea to pay off your full balance each month, if you can’t, you should still make a payment, even if all you can afford is the minimum.

Missing a payment on your credit card is costly. Not only will you be charged interest on your outstanding debt, but your credit card provider will likely also charge you a penalty. This means you’ll need to make an even larger payment the next month. To avoid missing payments, consider automating them or placing a reminder in your phone or on your calendar.

Have an Emergency Fund

Having an emergency fund is crucial for avoiding debt troubles. One major reason why people get into credit card debt is because they are faced with an unexpected expense and they don’t have the funds available to pay for it. This leads to them reaching for their credit card.

Life is unpredictable. Your car could break down, your fridge could break, or you could lose your job suddenly. If any of these things happen to you and you don’t have an emergency fund, you’ll likely have no choice but to get into credit card debt. Before this happens, start saving a bit of money each time you get paid. Over time, you’ll build up an emergency fund that can help you cope with life’s unpredictability.

Get Help

If you have a large amount of credit card debt and you’re unable to pay it down, or if you’re struggling to make the payments on your debt, then it could be a good idea to speak with a licensed professional. There are options available and finding the right option for you can help you reduce your debt and start living your life debt free.