Swiping your credit card unnecessarily and spending impulsively can make you end up in a circle of debt, but using a credit card wisely can help you avoid debt and also build a good credit score. If you want to avoid credit card debt, here are some simple tips to help you along the way:
Make a budget and stick to it
If you are not confident about keeping a tab on your credit card spending, the best solution is to make a budget and stick to it. This will help ensure that your credit card spending does not go overboard. A very helpful tip to avoid credit card debt is to leave the card at home. Even when using it, make it a habit to clear off the dues with immediate online payments to keep the debt from mounting.
Don’t get into the web of special services offered
Most credit cards offer multiple protection plans, like life insurance, travel packages and clubs, and the like. You will, however, realize that most of these plans are overpriced and may include a lot of things you don’t require. You might be tempted to take up an offer that you might not need just because it is offered at a low rate. For example, if you opt for a travel reward plan but don’t travel very often, it costs you more than the rewards you might get. It is best to avoid such offers to avoid debt.
Maintain all records in order
You must file all receipts and ensure that they tally with the statement sent to you every month. Keep in mind that this is the only way to find out any errors in your statement or any fraudulent charges that have been levied. Also, informing the company of any fraudulent issues at once can help resolve them.
Don’t use the cash advance facility
Utilizing the cash facility offered through a credit card can impose heavy interest rates apart from transaction fees, without even a one-day grace period. Even if you manage to repay the balance by the end of the month, you will be charged interest on the amount that has been advanced, so avoid using your credit card to make cash advances.
Avoid using your credit card for perishables
Another tip to avoid credit card debt is to not use your card when you go out for dinner or while paying for your groceries as these things will have already perished by the time your bill arrives. So, understand that it is not a good idea to pay interest on perished goods.
Use the credit card only for a contingency
It would be wise to swipe your credit card only for unexpected contingencies that may crop up. During an emergency, swiping your card is the best solution as averting debt is almost impossible in some situations. So, avoid using your credit card, except in unavoidable emergencies.