Racking up those credit cards can be an easy thing to do. Between online shopping, emergency expenses, and picking up sale items to “save” money in the long run; before you know it, you can hit the limits on those handy-dandy cards in no time.
The harder part comes when you have to try and pay those balances off.
Having said that, perhaps refraining from haunting credit card debt is the way to go. Below are five ways to prevent yourself from getting into crazy credit card debt.
Have A Budget
Create a monthly budget and then stick to it. This will help you determine “needs” from “wants”, and potentially assist when it comes to pulling out that credit card for an unnecessary expense. Allot a portion of your budget to areas like “entertainment”, “clothes”, and other ad hoc spending. Just because you are on a budget, doesn’t mean you can’t have fun; however, keeping a track of what you spend, and not going over those means will help you stay out of credit card debt.
- Keep Them OUT Of Your Wallet
There is a lot of advantages to having a credit card. Most hotels and other accommodations won’t allowing booking without one, and these cards can help you to establish a credit and credit ratings when looking for other financial loaning opportunities (i.e. mortgages, credit lines, etc.); if they aren’t racked up that is. To ensure you don’t use your credit cards for anything other than emergency or “needed” use, keep them stored in a cabinet at home. You can pull them out when you require them, and you won’t be tempted to use them while out and about, when a “sale” catches your eye.
- Carrying A Balance
Most times, the intention to pay off a credit card is there, and then you get side tracked. If you do charge items on a credit card, try not to carry a balance for longer than six months. The interest tends to compound at this point, making it that much more difficult to pay them off completely.
- Think About Low Interest
Speaking of, if you do find yourself in a credit card bind, then think about switching your balances to a low-interest card. This will help you to pay off that debt easier, and save money in the long run. Note, some introductory offers set a low-interest rate for a short time, so don’t get caught up in a balance transfer that will see those interest rates hike up in a few months.
- Know Your Rewards
Reward credit cards are all the rage these days, and for some consumers that are diligent about paying off their balances that are charged each month, this can offer a ton of savings in the long run, with rewards equalling out to travel points, consumer goods, and even “free” money, if you will. However, for those who don’t pay attention to their spending and fees linked to these types of cards, rewards credit cards can equal out to debt disaster. You need to be on top of your rewards card spending in order for this concept to work.
Scott Hastings is a CPA with over a decade experience in finance. He started his career in audit with PwC and is excited to bring that knowledge to RM Credit Cards.