Tips To Avoid Credit Card Debt

Today, we will be sharing some tips for you to avoid credit card debt and bad credit score. Read the following:

• Stop carrying cards

If you have excess debt, closing credit accounts may not be an effective financial management act. Experts suggest keeping one credit card for emergency purposes only. All other cards should be cut up and destroyed. Be sure to cancel all accounts after you apply for a new card and talk to the card issuer about your decision.

• Protect credit cards 

Your credit card is an asset to ensure credit card companies don't go out of business, but you have to manage them wisely. Having credit cards with steady and stable payments will improve your credit score, which will help you be approved for larger types of credit. Unless you have the financial means to pay the balance in full each month, credit cards should be reduced and paid off.

• Watch your spending 

Many companies are worried that their customers are overextending themselves with credit. Credit reporting agencies, such as Experian, have developed new reporting methods that will track the amount of credit counselors and store cards that people have taken out, how long these accounts have been opened, and the balances they are carrying. Consumer advocates are worried that banks won't limit their credit cards to what the customers can afford, but borrowing money at high interest rates is not a wise long term strategy.

• Pay for purchases in cash 

It is less costly and more convenient to pay in cash, especially when buying something that costs high. Credit cards usually charge higher interest rates on items you have had previous payment and debt. Financial experts advise people to use cash for making purchases in stores and try to pay in cash during future purchases to avoid accumulating debt.

• Pay in full

If you find yourself putting purchases on credit cards, stick to a budget. You may start with short term and low interest rates, and keep paying more towards the principal balance. Home equity loans and financing your vehicle can also be good alternatives, especially if payments are lower on these two items. If you can't afford to pay in full, there are a lot of installment payment plans that will allow you to lower your balance on a monthly basis. 

• Save money 

It is also important that you always have savings in the bank, so you can use these in case of an emergency. If your savings is easily accessible, it is recommended to put as much as you can each month into your savings account. You will be surprised by how much money you can save by having and using a savings account.

• Buy a house 

With high interest rates on credit card balance, credit cards, and loans, you may find yourself in heavy financial obligations. Owning a home can help you escape from credit card debt. Research mortgage options and prices, and look at the service options, interest and payment terms available. The home will provide long term security, and the lower interest rates will make your home mortgage more affordable.
Keep approved credit open. Finally, keep your credit card and other approved accounts with credit card companies open. It used to be that lenders used credit reports to quickly approve or decline credit. With new laws in effect, they are now taking a more lengthy and painstaking approach to approve the people for new credit cards and accounts.

Although it may be difficult to change habits or finances that have led you to credit card debt, make a conscious effort to change it. If you have lost control of your finances, take responsibility, and contact a credit counselor who can help you make a plan so you can change both your finances and your habits.