Credit card debt is at epidemic proportions in the US, with an unprecedented $4.2 trillion of debt recorded in December of 2019. The negative elements of credit card debt are numerous, such as damage to your credit score, increased interest repayment amounts and the result can have a huge impact on future plans such as buying a home. The best way to avoid credit card debt is by having a plan in place that you can adhere to.
Why avoid credit card debt?
Turning to a credit card may seem like the easy way out of a financial issue or a fast and effective way to pay for a car, a large deposit or a hefty medical bill, but the reality is that for many Americans, the signs of credit card debt going unnoticed and unmanaged lead very quickly to a hefty debt issue. Being in a situation where these debts cannot be repaid can lead to hard times, unnecessary stress, creditor harassment and ultimately you could find yourself on the sharp end of a lawsuit. It’s very important that you don’t allow a debt lawsuit to cause more trouble than needed; with that in mind, in this article we look at a few of the ways you can avoid stacking up an unnecessary credit card debt.
Build a buffer instead of a debt.
If you can save yourself 6 months of living expenses then you will always have a buffer to turn to in the eventuality that you need to splash out on an unexpected cost such as a big car repair, a medical cost or a home maintenance emergency. Without that buffer in place it’s far too easy to turn to a credit card solution and this can often be the first step towards credit card debt. It might take time, dedication and lots of will power to put that much aside, but it’s well worth it if you can.
Don’t spend unnecessarily
There will always be desirable purchases on the horizon for which you simply do not have the budget in place to afford without relying on credit. If you can avoid spending on these big ticket items unless you have saved enough funds to purchase them outright rather than diving straight to the easy credit card payment option, you will be one step close to avoiding credit card debt.
Keep repayments consistent and timely
If you can ensure that your repayments are made on time with regularity, then you will be going a long way to avoid any unnecessary credit card debt. Missed payments lead to late fees, late fees plus extra repayments become even harder to pay and the result is turning to more credit card usage to get you out of that spiraling hole.
If you can afford it (and you should only be using the card if you can afford it), you should aim to pay off your credit card in full each month. This is the single best way to get the benefits of a credit card without the dangerous downhill dive towards debt. If that balance is at zero then you start each month afresh, in control of your finances and always able to make a minimum payment should the need arise. It takes self-control to keep your payments within these affordable boundaries, but the debt free rewards are worth it.