Posted by With the cost of living continuing to rise, it’s not surprising that more and more people are turning to credit cards to help bridge the gap between their finances. But, if poorly managed, then it can be very easy to slip into credit card debt. Once many people start to use a credit card, they then find it hard to imagine life without one, which can then cause a spiral into further debt when they become too reliant on its use and availability.
Credit cards can be very convenient and, when used responsibly, can be used to build up points on trips and shopping trips, avoid bank charges and add an extra level of security to big purchases you might be making, such as holidays or home goods. But, there are a lot of problems and some short-term decisions that can build up your credit card debt and become tricky to undo. Let’s take a look at some ways that you can avoid credit card debt.
Save For Purchases
With credit cards, a lot of people tend to find themselves in trouble when they begin spending more than they can afford. With credit cards, it’s important to use available credit just as you would with a bank balance. If you can’t afford it, then you should look to save up the balance, or at least a large chunk of it, pay for it using your credit card and then instantly pay it off using the saved funds. This way, you’ll get the benefits of using the credit card, but avoid the risks of not being able to repay the purchase in full or incur higher interest rates.
It’s important to ensure that the money you’ve saved up for credit card purchases isn’t spent on anything other than what it is intended for. You can look to open a dedicated savings account for this purpose, which can help you organise your finances and resist spending temptation.
Hold Yourself Accountable
If you have a credit card, then it is important to be honest with yourself about your finances. You should always know and understand the amount that you owe in total, as well as your repayment amount, fees and interest rates. Knowing the breakdown of your credit card finances can help you when it comes to repayments.
If you struggle to stick to the repayments, then getting support from friends and family can help you follow through with your goals. Ask one or two people close to you to hold you accountable each month. Show them your credit card bills each month and ask them to make sure that you make the repayments and check in with you regularly to make sure that you’re not overspending on the card.
While friends and family can’t give you expert financial guidance or advice, just holding you accountable can help with your credit card management. If you find that you are struggling with your credit card debt, then it is worth speaking with a debt advisor who can help you come up with a solution.
Read: The Do’s and Don’ts of Investor Calls
Keep Your Limit Low
If you can, try to keep your credit card limit as low as you can and avoid going above a figure that you’re comfortable with. Your credit card provider is no longer allowed to increase your limit without letting you know, so if you do try to lower your credit limit, they may try to talk you out of this. If this happens, then stick to your limit and look to lower your limit to something reasonable.
If you’ve got a credit card to build your credit rating, then you don’t need to have a high limit or spread the limit over numerous cards. If you’re using a card for big purchases, such as hotel reservations or concert tickets, then you don’t always need to increase your limit – some credit card providers let you make a temporary increase if it can be paid off quickly. If you’re unsure, then it is always worth giving them a call to find out more.
Conclusion
Dealing with debt can be an overwhelming decision to make, but the sooner you get your finances in check, the better. It’s always good to know and understand more about your credit card limits and finances, as the more you know, the less likely you are to overspend or exceed your credit limit.
With patience, careful planning and help and advice, you can start to free up your credit and reduce your spending and financial worries. It might take some time and dedication, but working your way towards financial freedom is more possible than you think. If you do find that you are struggling with debts, credit cards or otherwise, then there are always debt advisors with a vast amount of experience and knowledge to help you. There may be solutions available that you’re not aware of, such as DRO and much more.