1. Build a Safety Net
A credit card can be the only option to save you from a major car repair or unexpected medical bill. You can start building your emergency fund gradually over time instead of relying on debt to rescue you.
2. Stick to What You Can Afford
Access to credit can be tempting when you see things you want to buy but can’t really afford. You may think you can pay it off over time, but your future commitment involves risks. The better solution is to save money to buy what you want instead of putting it on credit and only use your credit card for purchases you can pay off immediately.
3. Avoid Unnecessary Balance Transfers
Transferring a balance from a high-interest credit card to one with a lower interest rate can be a smart move to pay down debt cheaper. However, this process can backfire if the balance is transferred repeatedly without paying a significant portion of it, as repeated balance transfer fees can increase the debt massively.
4. Pay Bills on Time
Staying on track with your credit card payments is one of the best ways to avoid accumulating credit card debt. Once you miss a payment, the next payment amount will significantly increase as you’ll have to cover two payments in addition to late fees. It will become harder to keep up with payments, and you’ll feel pressure on your budget, causing you to rely on credit cards to make up for the cash shortfall.
5. Pay the Full Balance Every Month
Paying your credit card balance in full every month is the best way to avoid credit card debt. Starting the month with a zero balance completely eliminates the risk of falling into credit card debt. To achieve this, you need to be disciplined and only spend what you can afford and pay off within the month.
6. Recognize Signs of Credit Card Debt
Recognizing the signs of credit card debt allows you to curb your current spending habits and replace them with actions that benefit you in the long run. For example, if you notice that your credit card balance is so high that it can’t be paid off in full, it indicates that you’ve overused the card. Curbing your spending until you can pay off the balance will prevent debt from worsening.
7. Avoid Cash Advances on Credit Cards
In a moment of desperation, you might consider taking a cash advance with your credit card. However, it’s one of the most costly transactions on credit cards, as there are processing fees, higher interest rates, and no grace period to avoid finance charges. The inability to access funds that aren’t in the form of debt could signal a serious financial issue.
8. Do Not Lend Your Credit Card to Others
You are ultimately responsible for all purchases made with your credit card, and lending it out puts someone else in control of your balance. If they start spending recklessly and refuse to pay their share, your credit card issuer still holds you accountable for that balance.
9. Understand Your Credit Card Terms
Your credit card agreement outlines everything you need to know about using your credit card – how interest will be applied, the fees you will incur and when, and anything that could increase your balance. Understanding these features of your credit card can help you avoid credit card debt because you’ll know how the use of your card will cost you more.
10.
Reduce the Number of Your Credit Cards
The more credit cards you have, the greater the chance of falling into debt. Even if you are good at controlling yourself, it’s best not to tempt yourself with thousands of dollars in available credit. Reducing the number of credit cards in your wallet not only helps you avoid credit card debt but also makes it easier to manage your monthly bills.
Source: https://www.thebalancemoney.com/avoid-credit-card-debt-960043
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