Finding ways to avoid credit card debt problems is becoming increasingly difficult when you’re misusing your credit cards.
Having a credit card today is like breathing. Almost everyone has one and most banks practically beg you to take advantage of their offers.
Not very long ago, my bank offered me a MasterCard at zero administration costs, a substantial spending limit with zero interest fees for 1 whole year, and the possibility to cancel it at any time before they could start charging their fees. How do you say no to such an unbelievable credit card offer?
When properly used, #credit #cards offer many advantages. Misuse them and you’ll find yourself in quite the financial pickle!
What banks don’t tell their clients – that meas you – is that credit cards are high interest loans in disguise. They’re great, if you know how to control your own finances, but they’ll become a debt nightmare if you’re not careful.
Knowing how and when to use a credit card is important. Here are some clever ways to avoid credit card debt problems.
Avoid credit card debt problems
Carefully read your credit card agreement
Before signing your credit card agreement(s), you should make sure you’re familiar with your legal financial obligations.
The first step in using a credit card wisely is knowing what your credit card terms imply. How high are the fees, how are they applied, and so on.
Once you fully understand how your credit card works, it will be significantly easier for you to avoid debt problems.
Pay with cash where possible
Shopping for groceries? Pay with cash! Going out with friends? Use cash to pay for your purchases.
Actually, you should try and pay with cash wherever you go. If you want to learn how to avoid credit card debt, know that not using it is your best option.
Avoid unnecessary and impulse purchases
You’re probably carrying your credit card around everywhere you go, since it’s in your wallet, right?
Well, that doesn’t mean you should use it whenever you feel like it, just because you see something “pretty” you’d love to own.
Many make the mistake of thinking credit cards have a spending limit so you can use it, but often slipping into debt is dangerously easy. Just think twice before you charge something to your credit cards!
Don’t chase after the credit card rewards
Another easy way to get into debt is to chase after the credit card rewards.
The more you charge, the bigger the reward? Well, the more you charge, the bigger the debt!
It’s great that financial institutions offer some rewards to their most loyal customers, but don’t make it your life goal to chase after them!
Save money on a regular basis
What if you don’t need to ever charge stuff to your credit card? Wouldn’t it be the ultimate way to avoid debt?
Saving money on a regular basis will help you have the necessary funds to spend when you need something costly. Instead of having to pay high interest rates, you can avoid it altogether if you have enough money stashed away!
Avoid taking out cash advances
Let’s start with stating the obvious: if you’re in need of a cash advance, you must be doing something wrong, financially speaking.
Cash advances usually end up with the credit card holder paying a whole lot in interest rates. Even if you manage to pay the balance in full at the end of the month.
Use your credit card for emergencies only
If you can manage to only use your credit card for emergencies, then you’re on the right financial path!
If you can manage to avoid using a credit card altogether, great! But emergencies can occur, always out of the blue, so it’s better to just use your credit card if you really need to!
Maybe the money you saved up is not enough to help you through a tough financial crisis, so yes, having a credit card available can help. Of course, you’ll need to pay the money back as soon as possible!
Pay your balance in full and on time each month
Credit card debt should be avoided, but if you do find yourself with debt problems on your hands, make a plan to pay it off. And stick to it!
If possible, pay your balance in full each month. This way, you’ll avoid some nasty interest charges. Make the payments on time and you’ll also avoid the late fees and possibly having your interest rate raised.
Needless to explain these 2 tips imply you shouldn’t miss any deadlines. Set up automatic payments if you think it’ll help.
Nothing’s worse, financially speaking, than being in debt. In times when everyone’s struggling to become financially independent, credit card debt can seriously drag you down.
If you can avoid signing up for a credit card altogether, great! But if you have one (or many), try to use it wisely and avoid paying those high interest rates for no good reason.
What other ways are there to stay out of credit card debt? What worked for you?
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