If you have struggled with credit card debt, you are not alone. The Federal Reserve reports that total U.S. credit card debt was at its highest point ever in 2017, at over $1 trillion. Major credit agency Experian reports that the average American has a credit card balance of $6,375, which is a 3% increase over last year.
Unfortunately, credit cards can have incredibly high interest rates. The average U.S. households that carry credit card debt are paying nearly $1,300 per year in interest charges. If you can’t make your payments, you face aggressive collection tactics and might have to consider bankruptcy to avoid financial ruin.
Whether you have already been through bankruptcy or would like to avoid the process, keeping those balances low or at zero is the best plan. If you’re going to use revolving credit, here is how you can stay out of credit card debt.
Keep an Emergency Fund
Many people get into significant credit card debt thanks to costly emergencies. Build up an emergency fund so that you won’t have to use credit cards to pay for unexpected medical expenses or vehicle repairs.
Charge Only What You Can Afford
Avoid buying things that you can’t afford with credit cards. Generally, if you can’t afford to pay cash, you shouldn’t put the purchase on a credit card. Charging can be a source of building credit, but you should only do that with the guidance of a credit repair consultant.
Understand Your Credit Card’s Terms
When you get a credit card, carefully read through the terms of the card’s agreement, and make sure you understand all costs and fees that will be applied to your account. Credit card companies apply interest rates differently. Learn the rules for what fees they can charge and when.
Avoid Unnecessary Balance Transfers
Transferring balances to juggle due dates is an expensive practice because of the fees. If you’re going to transfer a balance to another card, you should have a good reason for doing so such as to take advantage of a lower interest rate.
Don’t Miss Credit Card Payments
You can avoid mounting debt by keeping up to date with your credit card payments. As soon as you miss a payment, your next payment will be higher and will also have a late fee attached. This is going to put an additional strain on your budget, which could prompt you to use credit cards for your monthly expenses.
Pay Your Entire Balance Each Month
The best way to stay out of credit card debt is to pay off your entire balance each month. When you don’t have a recurring balance, you aren’t accumulating interest charges and won’t have to worry about mounting debt. This means that you will need to be more careful about what you charge throughout the month.
Avoid Using the Cash Advance Feature
Cash advances are never good. If you had cash in the bank or an emergency fund, you’d be taking the cash from there instead of from a high-interest lender. Avoid using this service, and focus on creating a tighter spending budget instead if you want to avoid debt troubles.
Limit the Number of Credit Cards in Your Wallet
The more readily available your credit is to you, the more you risk charging unnecessary items. Instead, leave your credit cards at home.
Speak with a Qualified Debt Relief Attorney If You Need Help
Sometimes purchases made with good intentions turn into debt that can’t be repaid. Unexpected events such as medical emergencies and job losses can create financial hardships, and you might begin missing credit card payments. If you are being pursued by debt collectors, you may be able to make a fresh start through bankruptcy.
An experienced bankruptcy attorney can help people in financial distress from credit card debt find relief and avoid financial ruin. If you can’t pay your bills, contact a bankruptcy attorney in your area to find out how a Chapter 7 or Chapter 13 bankruptcy can help.