How to Avoid Credit Card Debt

Here are a few simple ways in which you can avoid credit card debt.

· Build up savings fund. Create a savings fund over a period of time so that when an emergency strikes you do not have rely on raking up your credit card with a high balance. You can use the saved up resources for emergency use.

· Charging what you can afford. Do not rely on the monthly billing cycle to buy today what you have to pay for 20 days later. If you’re sure of having the money to buy something 20 days later, it is better that you buy it when you have the money rather than try and pick it up on credit.

· Avoiding balance transfers. Balance transfer makes sense in certain situations where you can genuinely and actually save money by taking advantage of a lower rate of interest in promotional period. However balance transfer should not be used as a way to get out of debt or to delay payment on our credit card balance. The balance will have repaid eventually and doing credit card balance transfers repeatedly will only serve in building up the balance due to the interest rate and the balance transfer fee which is typically 1 to 3% of the balance being transfer.

· Do not miss credit card payments. Even if you can make the minimum payment on a credit card bill you should do that rather than miss payment completely. Missing credit card payment completely as several negative repercussions such as your interest rate increasing, been charged a late fee, being charged an interest and being negatively reported to the credit bureau with a negative effect on your credit score.

· Paying the balances in full each month. Paying your balance in full at the end of each month is a good idea because you will avoid extra charges and save money over the interest. You will also build a healthy credit history and a good credit score by doing this.

· Avoid cash advances. Cash advances can be a sign of underlying problems with cash flow. If you find yourself with it the need to take out a cash advance you should realize that you are facing financial instability for which cash advance is not an answer. Cash advance might provide a temporary solution but will cost you more money in the long run. Try and look at other options such as taking financial help from family or friend.

· Understand the credit card terms and conditions. Try and take time to understand the terms and conditions were to credit cards specially the ones pertaining to increase in interest rate and the creditors’ rights in to case of default or late payment.

· Manage your credit cards. Managing your credit cards is about controlling the number of credit cards that you have as well as managing the ones that you have by charging each one of them at least once every 2 to 3 months and paying down the balance in full.

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