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Avoiding Credit Card Debt
It is hardly much of a comfort that bad credit card debt is one
the most common debts but these are the facts. And what is worse is
that, unlike credit card fraud, which constitutes a crime against
you, with credit card debt you are also the victim but this time it
is completely your fault. Yes, as far as credit card debt is
concerned, you are your worst enemy! And you can even destroy
yourself, if you don't take the right measures!
Avoiding credit card debt is not as difficult as one might think.
Anyway, credit cards are not meant to be a financial disaster. And
they aren't if you use them wisely. Although getting out of credit
card debt is not impossible, it is much better if you avoid getting
into debt. So, the basic rule is: Don't spend more than you earn. And
pay your balance on time. It is that simple and the same time that
difficult. But if you follow several simple rules, like the ones
listed below, chances are that you will not get into credit card
debt:
Limit your impulse purchases. Impulse purchases are a
real devil. You see something that you can't live without (though in
fact you have been living without it for years) and you will die if
you don't have it. If the object of your dreams is expensive, then
it is more difficult to make your mind and take it but if it is not,
you don't even think for a second but purchase it instantly. For
instance, a new CD that costs $20 is really cheap. Why not get it?
Food deliveries are very convenient. Why cook when you can order and
get a meal delivered to your door? It is not expensive. Yes, none of
these are expensive but when you make a couple of such small
purchases a day, you can easily exceed the $100 mark. And if you do
it a couple of times each mount, you could spend $500 or more on all
those small unplanned joys in life.
Pay your balance in full when it is due. Let's
continue the previous example. If you earn $2,000 a month and your
rent is $1,000, then $500 on impulse purchases are half of your
monthly allowance. If you didn't have a credit card, you wouldn't
have even dreamed about it. But the fact that you have a credit card
actually does not change things much because if you don't pay these
$500 in full on the due date, which generally is only days or weeks
away, the balance is taken to the next month. So, you still have to
pay it but this time with an interest and it is already $510, for
example. If you leave it for one more month, it gets to, let's say
$521. If you leave it for a year, it can get to $600. Partial
payments, like $40-50 a month don't help much because you are
actually still paying enough interest, so it is really best to pay
your balance in full.
Don't go over the limit. Late payments are not the
only type of transaction that can lead you to payment of higher
interest rates. Going over the limit might also penalized by higher
interest rates, so it is strongly recommended that you do it only if
you absolutely have to. And of course – try to repay the money
you borrowed as soon as possible, before high interest rates start
to pile up.
Check your statements. You can regard it as too much
bureaucracy but carefully reading your statements for any suspicious
activity is the only way you can protect yourself from credit card
fraud and debt. If you don't read your statements and there are
errors in them, you end up paying for expenditures you have not
made. Well, if your expenditures are not enough, you can pay the
fraudsters' as well but isn't it much better to pay only what you
owe? So, take a look at your statements – this is not a waste
of time!
Of course, there are many other ways to protect
your credit card and avoid credit card debt but more or less they
revolve around the ones we have already mentioned. And basically,
there is nothing new under the Sun – spend less than you earn
and beware of false transactions. If you keep to these simple rules,
you will have peace of mind!
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