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If you are not in a position to pay off the amount due on credit cards,it’s better to avoid using it, because credit card debt is a serious problem. This article guides you through the various factors you must know for avoiding credit card debt, this includes
What are the tips to be followed to be safe from credit card debt?
What are the steps that have to be taken if credit card debts are beyond your control?
What you have to do if you have a small credit card debt?
Credit card debt is a terrible thing. For many North Americans, it is also a problem that is far too real. The average North American credit card debt adds up to a few thousand dollars, and according to credit card statistics, most North Americans do not pay off their credit card in full each month. Many bankruptcies each year are caused by overwhelming credit card debts, so if you have credit cards, you will want to keep your spending and your debts in control to prevent serious financial problems.
Why Credit Card Debt Is Such A Problem
On the surface, credit cards seem like innocuous things. When used properly, they can also be quite safe and convenient to use. However, when customers take out high credit limits and do not take care to pay off debts quickly, problems can occur. Many credit cards have high interest rates – 16% to 21% in most cases. If you do not pay your credit card balance in full for a few months, you may be at risk. Even small debts can quickly become too much to repay.
If You Have No Credit Card Debt Yet
If you do not owe credit card companies money, count yourself lucky. If you have a credit card, however, you may sooner or later carry a balance. To safeguard against debt, try the following expert tips:
- Keep track of your receipts and spending
It is easy to make several purchases on a credit card without realizing how much you are spending. Keeping mental track of your balance or jotting your spending on a paper at home can help you stay in control.
- Manage your account
With today’s online banking and telephone banking features, it is easy to check your credit card account more often than once a month. Checking your balance regularly can help keep spending in check and can help control debt.
- Keep card limits low
If you pay off your credit card each month, credit card companies will eventually offer you higher credit limits to enjoy. However, if you do not think that you can repay these higher limits, you can always decline the offer.
- Safeguard against fraud
Always check your credit card bills and report any errors or stolen cards at once. Only give your card to companies and businesses you trust. Credit card fraud can burden your card with someone else’s debt, so shop safe.
If You Have Small Credit Card Debt
If you have a debt that you could repay in a few months, you have a small to moderate credit card debt. Although you may not worry about your debt, you should start taking steps to shrink your credit card balance:
Pay more than the minimum each month. Paying only the minimum required on your credit card debt makes your debt grow. Even a small balance will take years to repay in this way, and you will end up paying several times your regular purchase price for every item that you charge.
Stop using your cards until your repay your current balance. If you keep using your cards, your debt will continue to grow, making it harder to repay.
Open a savings account. Putting a small amount of money into a savings account each month will create an emergency fund. If you need something suddenly and do not have the cash for it, you can use your savings rather than your credit card. You can also use your savings to pay off a credit card balance that becomes a bit larger.