Paying off credit card debt after it has accumulated is a task, but avoiding the debt is relatively easier and only requires you to keep certain things in mind while using the card. To that effect, we have here for you five effective tips to avoid credit card debt:
- Know your disposable income
The first thing that you need to do is to calculate your disposable income each month. Take into account all your bills and come up with an estimate of how much money is left after paying them off. Then, formulate a budget from your income and ensure that you spend accordingly. With a credit card in hand, it is often easy to think that you can spend as you please, but ensure that you only spend as much as you have. Credit money is not actual money, so don’t count that while preparing the budget.
- Plan the major expenses
Avoid impulse buying when it comes to large purchases. In other words, don’t buy something that you would not have been able to afford without a credit card. This can include anything from a designer outfit to a new smartphone. A credit card could lure you to start prioritizing your wants over your needs, so it is always better to have a plan for making big expenditures and carrying out the major purchases. Planning your expenses is a very helpful tip to avoid credit card debt.
- Prioritize credit card statements
Avoiding your credit card bill month on month can surely land you in trouble, so avoid putting them off. Make it a habit to read your credit card statements and pay them off every month to ensure that you do not end up with a pile of debt. Also, it is important to read these statements to verify that you are not being billed for charges that you do not recognize.
- Unsubscribe from offers
If you keep getting offers of freebies and discounts, the chances of you ending up making a purchase go higher. Many of these look too good to resist, and the temptation is especially high during the holiday season. Another one of the best tips to avoid credit card debt is to unsubscribe from mailing lists and save yourself from this possible blunder of making an unnecessary purchase.
- Understand the warning signs
Credit card debt comes with certain warning signs, and one of them is the usage of your credit card for every little purchase from gas to food as it might be a problem in the long run. Another major warning sign is making constant balance transfers or skipping the payment of a credit card bill to pay another bill. Additionally, having many past due accounts is a red light. You need to be aware and take immediate steps to deal with debt before it impacts your credit score.