5 ways to avoid credit card debt
Do you tend to overspend with your credit card and end up struggling to pay for your expenses? This could be one of the signs of misusing the power of your credit card and spending above what you can actually afford. To help prevent yourself from overspending and having to deal with bills you can’t handle, here are some ways you can avoid credit card debts:
1. Avoid unnecessary spending
Swiping your credit card for things you can’t afford is a shortcut to the pool of debts. One mistake that many people make is paying every small thing with credit card, which piles up at the end of the month and leaves them wondering- how on earth did I spend so much? That’s why it’s advisable to keep track of your credit card transactions throughout the month. And remember, your credit card is not your personal money factory. Use it only in times of emergency and not to fulfill your impulsive desires and by doing so, you are able to stay in your monthly budget.
2. Put an auto-limit to your card
If you are a big spender, talk to your bank and put an auto-limit on your card to protect yourself from overspending. Most banks automatically raise your credit limit if you meet their criteria, which might cause you problems in the long-run. Thus, turning on your auto-limit could be a good protective measure, it will prevent you from spending more than you can actually afford and also act as a self-reminder to stop spending.
3. Avoid balance transfers
Balance transfers are only a good idea if you are saving yourself from paying high interest rates, but you should stop if you are only doing it to cover your other debts and due dates. Balance transfers charges you with transfer fees which could be an added load to your debts.
4. Stay away from withdrawing cash
Unless you accidentally left your debit card at home, withdrawing cash is a big no. You might not know this, but cash advances are known as early stages of credit card debt and financial meltdown – what’s worse than cashing out money you don’t actually own? Similar to balance transfers, the bank charges a certain amount to your credit card for every cash withdrawal. If left unnoticed, it could mount to an unreasonable number that would come back to hurt you at the end of the month.
5. Limit to 30%
A good way to stop yourself from misusing your credit card is putting a limit of 30% to your credit card use. If your credit card limit is $1500, try to only use your card up to $450 which is only 30% of your actual limit. Setting a self-limit of 30% shows you are in control of your expenditure and acts as self-reminder of staying in the limit range.
Misusing your credit card will cause you problems, from having to deal with debt and getting a poor credit score that will affect you in the long run. With these tips, you can avoid mistreating your credit card, know the signs of credit card debt and protect yourself from spending more than you can actually afford.