credit card debt

How to avoid credit card debt

credit card debtCredit card debt is one of the worse financial blights on mankind today because of the high-interest rates. To understand Credit card debt we first have to look at how a credit card works. Credit cards allow you to borrow money which you need to pay back at a later date. Credit cards do not give you access to  free money remember that. The reason people end up in credit card debt is because they do not understand how this system works and they abuse it. Some reasons people use credit cards are to buy products which may be too expensive to pay for upfront. There are advantages to owning a credit card but you need to educate yourself. If you do not understand how to use this system properly, debt will be your friend.

Credit card loans are described as unsecured because there is no guaranteed repayment. There is no collateral to back these loans that is why they are said to be unsecured.Many people develop bad habits regarding credit cards because of financial abstraction. You can read about this in my blog post about dealing with financial abstraction.

There are people who spend their money unwisely, in fact, there are some who suffer from what I like to call spendingitis. Do you keep track of your amazon purchases?. do you buy on impulse?. Many people purchase things based on their emotions never do this. Before making a purchase with your credit card do a thorough evaluation into whether or not you actually need to buy it. Amazon has literally made window shopping a breeze. You don’t even have to leave your house but it is important to exercise control. Emotional spending can be one of the worse perpetrators of credit card debt. Here are seven ways you can avoid credit card debt, so let’s discuss.

Seven ways to avoid credit card debt.


Make a budget-Having a budget allows you to lay out all the things you will need to spend money on. a budget keeps you in check and prevents you from overspending if you stick to it. As simple as it is to make a budget it is surprising that a lot of people don’t do it. You need to be proactive and anticipate your expenses. It is not possible to anticipate all your expenses but there are things that you pay for every month without fail. You can budget for these expenses.

Limit the number of credit cards you have-The more credit cards you have the more you will want to use them.

Completely pay off your monthly credit card balance– It is important to pay off your balance so that the interest that you pay is more manageable. Paying your credit card bill on time also adds to your credit rating. A good credit rating makes it easier for you to get access to loans in the future.

Pay your bill on time-Not only does this allow to pay lower in interest it looks good on your credit rating. nobody wants to lend money to someone who doesn’t pay on time. Your records may show that you are unreliable.

Avoid Cash advances-If you don’t want to become the financial version of the titanic and sink in debt then don’t take cash advances. Cash advances don’t have a grace period. No grace period means that interest starts the day you get the advance which is something you want to avoid.

Track your purchases-Keeping Track of your purchases allows you get a better handle on your spending habits. Tracking also helps you to catch unauthorized charges. Always be aware of the purchases that you make.

Be aware of penalties-It is important to know what is the agreement that you sign for your credit card.It is more likely for you to follow through on the previous tips if you are fully aware of the penalties.

How credit cards affect your credit rating

How you use your credit cards determine whether or not you can get a loan. If you have a poor credit rating financial institutions see you as a risk. Payment history and the amount you owe are two things to pay attention to if you own a credit card. As mentioned above, you need to avoid falling into credit card debt if you hope to acquire loans in the future. A credit card can be an invaluable tool if you use it right especially if you run a business.

Many businesses are started on loans meaning that if you have a bad credit rating banks will not lend. A bad credit score makes it harder for you to find financing whether it is buying a house or car.  Another thing that can affect your credit score is your credit history. If you just acquired your credit card you may also find it harder to get certain loans. A short credit history means that your credit score may not be high enough.

Let me know if you learned something. Maybe you have a few more suggestions on how to avoid credit card debt? leave them in the comments below. Also share this content if you found it informative and as always stay focused.









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