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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