A record of $4.2 trillion in credit card debt is being carried by Americans, according to recent data. That entails an average of $6,194 in credit card debt for every household. Carrying an excessive amount of credit card debt comes with several risks - interest payments worth thousands of dollars, delayed financial goals, and potential damage to your credit score.
You can avoid credit card debt by maintaining spending and payment habits that don't allow you to get yourself in over your head.
Building a Safety Net
When emergency savings are inaccessible, a credit card may be the only choice to save you from significant unexpected expenditure such as a car repair or medical bill. While building the savings large enough to cover living expenses worth six months takes time, starting small with an amount like $500 or $1,000 can support you in taking care of the minor expenses that pop up.
Stick to What is Affordable
Credit access can be tempting when you find items you want to buy but can't really afford. While you might justify your purchase as something you can easily pay over time, compromising your future income is a risk. Instead, try saving up for things you want rather than buying them on credit. Don't swipe your credit card for items you cannot afford to repay right away.
Skip Unnecessary Balance Transfers
A smart move to pay off your credit card balance at a lower cost is to pass on a balance from a high-interest rate credit card to one with an interest rate lower than that. However, transferring balances to outwit the credit system, for instance, to skip paying on the due date, can take an ugly turn.
Make Timely Payments
Staying focused on your credit card payments is one of the smartest ways to refrain from falling into credit card debt. Once a payment is missed, the next payment due will be significantly higher since two payments will have to be made in addition to a late fee.
Every Month, Pay Your Full Balance
Paying your entire balance every month is the most suitable route to avoiding credit card debt. Begin with a zero balance each month, and you will be able to completely eradicate the risk of getting into credit card debt. Making the minimum payment won't be a cause of worry since your credit card will have already been paid in full.
