How to Avoid Credit Card Debt and Keep a Good Credit Score
Regardless of how we try to avoid using credit cards and stay out of debt, we still find there are times when we absolutely need to use credit cards. While they can be helpful and improve your credit score, they can also quickly become damaging if not used properly. Here are some tips on how to avoid credit card debt and still maintain a good credit score.
Be Selective With Credit Cards
There are so many credit cards out there all attempting to offer you better deals than the one before. Rewards cards can sound really good, but if you’re spending more than you should just to get the rewards, you’re not coming out ahead. In addition, rewards cards often charge an annual fee and tend to charge higher interest rates. Look for cards that charge a low interest not just for an introductory period but continuously. Find a credit card that will offer you the best rewards and stick with it.
Pay with Cash
There really isn’t a better way to avoid credit card debt than by paying with cash. Unless it’s an emergency, and we all have them, and you absolutely need to make that purchase, try to use cash instead of a credit card. This is a good thing to do even for a few weeks. It will help you know where you are spending the most money, and what areas you can cut down on. Handing over cash to pay for items is harder than swiping plastic, even though the total is still the same.
Limit your credit cards
Getting several credit cards to avoid having a maxed out credit card is a real bad idea. Chances are very good that you’ll soon max out the other credit cards as well. This can really damage your credit scores because a portion of your credit score comes from the balance you have in relation to your credit limit. Be sure to limit your credit cards, and don’t get more with the intention of closing it later on. It’s best to keep a credit card for a long time, so stick with the ones you get, and don’t go overboard.
Create a Budget & Stick with It
Budgets always have and always will be the best way to successfully manage your money. Determine how much you can comfortably afford and how much you want to spend each month on credit card payments. If you want to make a credit card purchase and it’s not in the budget that month, don’t make the purchase.
Pay off Credit Cards as Soon as Possible
What we like best about credit cards, that we can make small payments forever, is the very thing that can get us in credit card debt. Try to pay off the credit cards as soon as possible. Once you start paying for more than six months, you’re paying a lot in interest payments.
Avoid Trading in Old Cards for New Ones
Another thing that affects your credit scores is your credit history. You’ll have a higher score if you have the same credit card for several years than if you pay one off, close it and get a new one. Try to stick with the same card and pay it on time, particularly if it’s a low interest card.
If you find yourself in too much debt and don’t know where to start, talk to professionals about debt consolidation to get you back on track. These tips will prove helpful to stay out of debt, but if you find yourself dealing with financial struggles right now, it’s important to get the help you need to gain control of your finances once again.
Informational credit to Paddon & Yorke Inc.
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Category: Credit Cards
