Tips To Avoid Credit Card Debt
When it comes to spending money, most of us are pretty typical. After all, we’re human. We like to go out and have fun, whether that means treating ourselves to a night out or splurging on something we’ve been saving up for.
The problem with spending money is that it can quickly add up if you’re not careful. That’s where credit card debt comes in. Every time you use your credit card for an electronic transaction such as buying something from a store or booking a hotel reservation, your bank account gets slightly smaller.
If you don’t pay attention or take steps to rein in your spending, this could soon lead to serious consequences. That said, there are ways you can avoid getting into trouble with your credit card and manage the balance so that it doesn’t pile up and become a financial burden on you down the line.
The key is learning when it’s time to call your bluff and stop using the card before it gets worse than it already is. Let’s take a look at some tips that will help you achieve that goal!
Pay Your Balance In Full Every Month
Credit cards are designed to help you build your credit score. This means that every time you use one of these cards, you’re reducing your “credit utilization” to the amount you owe relative to your available credit.
This is a good thing. It means that you’re able to borrow money when you need it, rather than having to wait on other people to be able to offer you a loan. It’s helpful if you’re looking to buy a house, apply for financing when you want to start a new business, or take other major financial decisions that will have a big impact on your life. That said, you should be sure to pay off your entire balance every month.
This helps you keep your credit utilization as low as possible and also helps you stay in good standing with the credit bureaus.
Don’t Apply For New Cards Unless You Must
The first thing you need to do is figure out exactly why you’re in debt. Was it a poor shopping decision or something more serious, like a medical bill? Once you know that, you’re better able to find a solution that works for you.
For example, if you find that you frequently make unwise purchases with your credit card and you don’t have the money available to pay off the balance every month, you may want to take a serious look at getting a job. Similarly, if you know that you’re spending more than you can afford and falling behind on your payments, you need to take action immediately.
Make The Most Of Rewards Cards
Rewards cards are designed to help you make the most of your spending. Typically, the card will offer you a certain number of “ AIR miles ” for every dollar you spend using the card. You can then use these miles to book flights, hotels, or other travel-related expenses.
You can also redeem these miles for gift cards for retailers like Amazon or iTunes, or transfer them to a frequent flier program like Alaska Airlines or British Airways. It doesn’t matter what your favorite travel destinations are or what you’re hoping to do with your miles, there are a ton of different ways to use them!
That makes them a great way to make some extra spending money that can be put towards a vacation or another big expense.
Set Clear Goals And Keep Track Of Where You’re Going
A great way to stay out of debt and avoid getting yourself into trouble with your credit card is to set and meet financial goals. This can be as simple as saving 10% of your gross monthly income while you’re putting that money towards an emergency fund or a substantial amount of retirement savings.
It could also be as big as buying a new car or saving up for a major home improvement project. Whatever you choose, you need to be clear with yourself and the people around you on exactly what the goal is and how you’re going to get there. This can help figure out how you can make better financial decisions.
For example, if you know that your goal is to buy a new car and you’re trying to work out whether you can afford it or not, you need to have a clear idea of how much you have available to spend.
Monitor The Credit Card Statements Regularly
Most credit card companies will send you a regular “statement” report on your credit card spending. This will highlight all of the charges that have been made, including the amount and the date. This is an important step. You need to take a close look at the statements you’ve been receiving from your credit card company and figure out where you’re spending too much money.
There are a few different ways you can go about this. You can simply compare your current credit card spending against your previous spending habits. Depending on how many cards you have with different companies, that can be a very effective way to do this.
You can also set up a “bill monitoring” dashboard on your credit card company’s website. This will let you see your spending in real-time, including how much you’ve spent on each item and what date that was.
Bottom Line
Credit card debt can be a frustrating thing. If it gets out of hand, you’ll have to deal with the consequences and deal with the fact that you’ve let yourself get into trouble. Avoiding this problem in the first place is a much easier option, though.
All you have to do is make sure that you pay off your entire balance every month, don’t apply for new cards that you don’t need, keep your spending under control, and make sure you’re monitoring your credit card statements regularly. If you do those things, you’ll be much less likely to get into trouble.
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