Efficient Tips for Avoiding Credit Card Debt

Knowing how to avoid credit card debt is the first step to ensuring that you make your credit card work for you, rather than you working to pay off your credit card debt. Some debt is inevitable in life, such as that incurred through buying a house or attending college, but any other kind of debt should always be avoided as it simply means you are living beyond your means. Unfortunately credit cards are an open invitation to do so.

It is very easy to fall into the debt trap with credit cards, but just as easy to avoid. Once caught in the cycle of credit card debt it is hard to escape. Debt starts when you use the card for something you cannot afford to pay for at that time. If you fail to repay the balance in full at the end of the month then you are already carrying debt, and will be charged interest on it. The item you purchased is now costing you the price of the item plus interest.

If you pay merely the minimum balance on your card each month the credit card company is more than happy to make a profit from you in interest payments. As the interest adds up maybe you can’t afford to make the payment one month due to other priorities, or you simply forget. This will then cost you between $15 and $39 in a late payment fee, depending on the terms of the contract you signed.

Interest will also be added to your late payment fee, and most likely you will be placed on a very high interest penalty APR. Soon the debt spirals out of control. This should be avoided by never using the card for something you cannot afford to pay back in full on the date your payment is due, unless it is the only way of funding an unexpected emergency.

When you take out the credit card you should arrange to have automated payments debited from your bank account each month to pay off the balance of your credit card in full. This way you will never incur any interest payments or late penalty charges. Whilst carrying a balance may be acceptable it is not a wise move, and it is good practice to actually save up for what you want, and when you have the available funds then use the credit card to make your purchase.

Using credit for your payment will give you extra protection if there is a problem with the goods themselves or delivery issues. It will provide you with insurance for travel and when used sensibly will reflect well on your credit score. Never use your credit card for cash advances as the charges are ridiculous: use a debit card instead.

Credit cards have brought untold misery to people who have not been adept to using them to their own advantage, but have seen them as a way of accessing money they don’t have safely on deposit, or due in their next salary.

When you use your card and avoid debt your credit score will reflect your good financial reputation and you will then have access to the type of credit card which it actually advantageous for you to use as they have either rewards or cash backs for using them. These cards though are generally only offered to the type of credit card user with high credit scores who have successfully avoided the debt pitfalls of credit.