There are few things easier in life than The Swipe. Right? It takes precious little effort to run up credit card debt. And while there are many benefits to having access to “plastic,” racking up too much debt can be fraught. For one thing, there’s interest to deal with, your financial goals may be deferred, and you may even hurt your credit scores.
But you don’t just have to fall into credit card debt. In the main, all you must do is mind your spending and payment habits. Easier said than done, you say? We understand. After all, as of 2019, each U.S. household carried an average credit card debt of $6,194.
Keep reading for a closer look at avoiding credit card trouble.
Give Yourself Some Cushion
It happens all the time: everything is going smoothly with your finances – then comes an emergency, a car repair, say, or an unexpected veterinary bill. If you don’t have an emergency fund, what do you do? Whip out the credit card, which you may or may not be able to pay off right away, potentially setting you up for a period of financial instability.
So, yes, do set aside savings of at least $500 to $1,000 so that you don’t have to rely on your plastic for life’s unexpected circumstances.
Buy Only What You Can Handle
So, you see THE JACKET, or whatever, and you simply must have it. Seriously, though, unless you can afford it, step away. You may tell yourself that you can easily pay the credit card bill over time, but you’re taking a risk. You don’t know what’s going to happen with future income.
It’s a better idea to save up for things instead of putting them on a card. Reserve your plastic for purchases you can pay off immediately.
Be On Time
You want to always pay your credit card bills on time. You can pay up to $29 for a single missed payment, and a second missed payment will be markedly more because you’ll have to make two payments in addition to the late fee and an increase in your monthly finance charges. All this could unduly stretch your budget and make it difficult for you to keep up.
Pay it Off Every Month
Wiping out that balance each month is the best way to stay out of credit card debt. Doing so also eliminates concerns over meeting the minimum payment because the card is paid off. You’ll need to rein in spending, however, to pull this off and avoid getting into credit card trouble.
It can be tempting at times to get a cash advance on your card. You should avoid doing so, however, since you’ll be hit with a higher interest rate, a transaction fee, as well as finance charges. A cash advance is also typically a sign that you’re about to be in credit card debt, in which case you may need the help of Freedom Debt Relief. Stick to your emergency fund instead of going the advance route.
Curb How Many Cards You Have
It’s not rocket science: the more cards you have, the greater your risk of going into debt. Why tempt yourself with all that available credit? Limiting how many cards you have helps you avoid debt and makes it easier to handle your monthly bills.
Familiarize Yourself with Your Credit Card Terms
Sure, you were approved for your card, and we’re sure you were pleased. However, there’s more you need to know, including fee structures, how interest will be applied, and what could result in your interest going up. Understanding how using your credit card costs more can help you avoid credit card debt. In fact, you should review card terms even before you apply.
Avoiding credit card trouble really comes down to discipline and self-control. Only buy what you can afford and pay off your charges each month. If you do happen to fall into debt that you can’t handle, we suggest seeking help from Freedom Debt Relief.