Strategies To Avoid Credit Card Debt
Credit cards are aided tools for making purchases, but they can also be dangerous if you’re not careful. Here are six tips for avoiding credit card debt:
Pay off account balances
Now that you understand the basics of credit card debt and how it can affect your life, let’s discuss ways to avoid it. First, pay off account balances. Paying off your highest-interest balance first is one of the best ways to save money on credit card interest payments and get out of debt faster.
If at all possible, make more than the minimum payment each month; even just $10 extra per month can help pay down that balance much faster! If you cannot afford to pay off an account in full, consider applying for a consolidation loan instead so that your payments are lower and easier to manage financially.
Don’t open new accounts
While credit cards are convenient and effortless to use, they can quickly get out of control. Many people use them to buy things they don’t need, which ends up costing them more in interest than the original purchase price.
To avoid this trap, try not opening any new accounts or increasing your existing limits. You should only use credit cards for emergency situations; otherwise, it’s best to pay for everything with cash or debit cards that have low fees.
This way, you won’t be tempted by flashy offers on the backs of credit card bills and don’t have to worry about paying off huge balances every month.
Prioritize your payments
Prioritizing your payments can help you avoid credit card debt. To do this, pay the minimum balance on all of your cards except for the one with the highest interest rate. Then, pay off that card first before moving on to other payments.
This will allow you to get rid of your debt quicker and save money in interest over time. If you’re struggling with paying off credit cards each month, then make sure that there is enough money left over after paying all of your bills so that there isn’t any leftover debt at the end of every month.
If this is difficult for you due to other expenses or emergencies, consider putting extra money towards paying down debts rather than spending it elsewhere.
Utilize a credit card consolidation loan
Consider a credit card consolidation loan if you’re out of options and still in debt. A consolidation loan is a type of personal loan that pays off all your credit card debt, usually at a lower interest rate than what you’re paying now. Financial advisors like SoFi say, “With a credit card consolidation loan, the borrower typically receives a lump sum with a fixed interest rate and terms to pay off credit card balances.”
This can be helpful because it allows you to pay one low monthly payment rather than many different ones. However, it’s good to note that there are several different types of consolidation loans out there. Some are designed for people who already have good credit scores and others are available for those with less-than-perfect scores.
Generally speaking, getting approved for one is easier when your score is higher; otherwise, lenders may require collateral or co-signers before they give the green light.
If you are struggling with credit card debt, your best bet is to take control of the situation and pay off your balance. Doing so will help you avoid interest charges on top of what you already owe. In addition, it may also save your credit score if other bills are piling up around them.