The Top Five Steps on How to Avoid Credit Card Debt

Money/Finances - Money Management

By: HandymanBob     16-Apr-2011

Browsing Money/Finances Lists

Introduction:

Credit card debt is a serious problem in our lives today. Some consumers use credit cards like it is free money and before they know it, their debt is nearly impossible or out of control to pay off.

Keep a Check Registry of Credit Card Charges

One way to avoid credit card debt is to use your credit card just like you do a checkbook and keep a check registry of each charge and deduct it from a budgeted amount. Some consumers use credit cards to purchase gas or groceries so they can conveniently pay for them once a month. This only works if you keep track of your charges and stay within the budgeted amount.

Pay Off Monthly Credit Card Charges Each Month

Avoid credit card debt by paying off all of your monthly charges each month before interest is applied. Except for an occasional purchase, make only credit card charges that you can payoff in a month.

Keep In Mind That Credit Card Money Is Not Free Money

Avoid accumulated debt on credit cards by being aware of the costs in interest you have to pay if you do not pay off your credit card charges each month. Interest charges on unpaid monthly balances adds up fast and can be as high as 25% or more. That means for every dollar you spend you will be charged as much as $.25 for each unpaid dollar.

Avoid Purchasing Big Ticket Items With a Credit Card

Use a low interest loan from your bank or credit union to buy items that you can not payoff in a month. Online banking makes it very easy to setup and access a low interest pre-approved loan account that you can for this type of purchase. This allows you extended time to pay off the loan at a lower interest rate. Do not use a credit card for this type of purchase and you will avoid credit card debt.

Cut Up the Card

When all else fails, cut up your cards and stop using them if you find yourself getting behind in credit card charges. Some of us do not do well with this type of payment system and must stick to paying everything with cash. Management is the key to avoiding credit card debt.




Final Thoughts

You know what you make each month, so use a credit card to charge for things that you know you can payoff in a month. Use your credit card as a tool in place of a checkbook or cash but never to extend your purchasing power that will land you in debt with high interest charges.


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