There are thousands of people who get trapped into debts caused by unwise use of credit cards; many of them are even getting bankrupt. Therefore, you need to learn and implement the various strategies that should help you avoid credit card debts.
The nastiest thing about these debts is that the outstanding balances grow very fast because of the extremely high rate of interest and penalty fees that credit card companies usually charge. The following are seven proven ways on how to keep yourself debt-free.
Create And Maintain An Emergency Saving Fund
People who do not have an emergency fund often tend to use credit cards whenever they have to meet some unexpected financial needs, such as a medical bill or a major car repair. Therefore, you must start working seriously on your savings strategies. The best way to do this is by creating a budget plan and sticking to it consistently. There are two ways to save extra money – by reducing your expenses and by increasing your income. If you do both, you will always be able to avoid credit card debts.
Do Not Pay Just The Minimum Payment
Though credit card companies allow you to pay a certain minimum amount of your monthly balance and move on without worrying about any penalty charges, you are strongly recommended not to use this option. The option sounds quite attractive, but you need to understand that your debts are accumulating and you will have to pay additional interest on that balance.
If you keep on avoiding the actual debt and do not clear the outstanding balance for several months, the situation will be out of control very soon, where you will have no idea on how to get rid of the mounting debts and Pubfilm. Therefore, if you want to avoid credit card debts, you must make full payment on your credit cards every month.
Spend Only As Much Money As You Can Afford To Pay Back Every Month
Many people do not often realize that credit cards are just meant for their convenience; these cards do not provide the extra money. Every single penny they are spending using their cards must be paid back within a certain time frame. If you do not pay back the balances, you will end up accumulating debts. Therefore, you are strongly recommended to charge your credit cards to only as much amount as you can practically afford to repay within the period when no interest is charged on the balances.
Never Borrow Cash Advances Using Your Credit Cards
If you often fall into a situation, where you have to borrow cash advances through your credit cards, it is a strong indication that something is seriously wrong with your finances. You should never do this if you want to avoid credit card debts. Borrowing cash advance through credit cards is one of the worst financial mistakes a person can ever make. Therefore, you must thoroughly look into every aspect of your finances to find out the actual problem.
In general, if you do not have money to meet your urgent financial requirements, it usually means that you do not have an emergency fund or have an insufficient fund. If so, this is the time you must make some aggressive efforts to ensure you save more than enough money in your savings fund so that you can easily handle your financial emergencies as and when they come, without needing to borrow a credit card cash advance.
Learn To Say ‘No’ To Your Friends Who Want To Use Your Credit Card
If you have friends who are unable to have their credit cards and often ask for your cards to make certain payments, you must learn to say ‘no’ them. If credit card companies do not find them eligible candidates for credit cards, it probably means they have a bad credit history and are not good at handling their financial responsibilities.
Therefore, if you want to avoid credit card debts, it does not make any sense at all to lend your credit cards to such people. Even if they promise that they will pay you back, the chances are that they will keep on dillydallying and you will eventually end up accumulating debts.
Avoid Having More Than Two Or Three Credit Cards
Just one should be enough. Even if you have a very good credit score and can easily qualify for low rate credit cards, it is often not wise at all to obtain a large number of cards. It is not a fun game. When you will have so many credit cards sitting in your wallet, you will be tempted to use the same, especially when you are out for shopping or come across something ‘interesting’ while browsing the Internet. Even if you think you have great self-control, do not test yourself; it can be risky.
Read The Terms And Conditions Thoroughly On When And How The Various Charges Apply
To avoid credit card debts, you must also be well informed about the specific terms and conditions applicable to your credit cards. Though the new laws ensure better protection for consumers, you are still advised to review your monthly credit card statements and any notices or letter from your credit card issuer thoroughly. As per the new JCPenney credit card login, companies must send a notice at least forty days in advance before they increase their interest rates.
If you are not reading their letters as and when they come, the chances are that you will skip those notices as well and will wonder how the company has started charging a higher rate without informing you. Besides that, having a very good understanding of how the various charges apply to your credit cards also helps you make an informed decision on how and when you should use your cards.
In short, you must maintain a lifestyle that you can afford. When you keep in mind the above seven things and act accordingly, there is no reason why you should not be able to avoid credit card debts.