Today, it’s nearly impossible to avoid some credit card purchases. But the need to break down major purchases into more affordable chunks introduces a potentially significant problem: debt. In the United States, the average person has about $6,500 in credit card debt. This is an increase from prior years, which is a concern for many people who would like to avoid this problem. If you fall into this category, there are a few tips you can follow to stay out of credit card debt.
Don’t Borrow More Than You Can Pay Back
This tip isn’t practical for everyone, but a good rule of thumb for avoiding credit card debt is always to pay off what you owe completely at the end of the credit cycle. It’s possible to do this by only using your credit card for essentials, such as groceries. This strategy is ideal for people who want a credit card so they can build their credit score but want to avoid debt.
Pay More Than the Minimum Due
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Of course, some credit card purchases simply exceed what you can pay in a single month. When this happens, try this strategy: pay more than the minimum due at the end of the cycle. This ensures you not only pay the interest but also reduce the capital, so you’ll be charged less interest during the next payment cycle. This approach will also help you get out of debt quicker, since you’ll be charged less interest overall.
Retire Your Credit Cards
Credit cards are good for several reasons. Some people keep them for emergencies, and others save them to manage major purchases. But some people simply can’t avoid the urge to use their credit cards regardless of what they can afford.
A person who falls into this category can benefit by simply “retiring” his or her credit cards once they’re paid off. If you find yourself overwhelmed with payments and want to get to the point where you can retire your cards, debt settlement might be a good option for you.
Find Credit Cards With Low Interest
If you’re in the market for a new credit card and are worried about the possibility of debt, research can go a long way. Namely, look for credit cards with low interest rates. This will make it easier to pay off more than the minimum owed, so you’ll get out of debt much faster.
Don’t Use Your Credit Card
It might sound impossible, but there are alternatives to using a credit card. For example, retailers of major appliances such as stoves and refrigerators often offer in-house financing plans to break down the purchase across several payments. Check the interest rates to see if this would be preferable to using a credit card. Alternatively, if you’re just interested in building your credit score, avoid cards entirely in favor of other ways to build your credit without accumulating debt.
Credit is almost unavoidable in the modern world, but by using your cards wisely, you can avoid debt. Try these above tips either to use your credit cards more efficiently or to build your credit score without the hassle of taking on unnecessary debt.