How to Stay Out of Credit Card Debt
From Adviceopedia
If you’re wondering how to stay out of credit card debt, the best advice is to avoid using credit at all if you don’t need it. Since this is an impractical idea for many people, below are other tips to help you avoid having problems with your credit card usage.
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How to Stay Out of Credit Card Debt Easily
What is the Best Way to Avoid Credit Card Debt?
If you have not opened a credit card account yet, you are in a great position to stay out of debt by not starting one to begin with. If you are like most consumers, however, you probably have more than one credit card lining your wallet and debt is a major concern. Here are the necessary steps to stay out of credit card debt:
- Don’t open more credit card accounts than you need. In most cases, one should be enough.
- Be extremely cautious with how you use your credit cards.
- Pay off any balance on your credit card every month, without fail.
- Avoid impulse buys and splurges that you would never consider paying for with cash.
If you can avoid credit card debt to begin with, you won’t be faced with mounting interest charges on a monthly basis like many people have experienced.
Why Should I Worry About Credit Card Debt?
Even if you pay your credit card balance off each month – which is certainly preferable to carrying a constant and growing balance - you should still be concerned about how much you use your credit cards. There are a few reasons for this:
- When you utilize credit you are obligating future pay. If something happens that stops you from working, such as an illness or corporate downsizing, then you’ve lost that safety net of income to pay for the credit you have already used.
- Studies have consistently shown that consumers spend more money when they use credit instead of cash, so by using a credit card you may be spending more than you should without realizing it.
- Credit card debt can have a way of sneaking up on you. All it takes is one month when you decide to not pay the entire balance and you may wind up with a perpetual credit card balance.
If you are concerned about falling into credit card debt then you should consider not using cards at all.
Does Business Credit Card Debt Count?
If you are concerned that the business credit card your employer gives you will be reflected on your credit report then don’t worry. Even if your employer carries balances on corporate credit cards, this will not be reflected on your personal credit report.
The exception to this, of course, is if you own your own business and the credit card was issued in your name and based on your personal income level. Credit card debt for your own business should concern you since you are responsible for it.
Can I Get Away With Not Having Credit?
Contrary to popular belief, it is possible to function within today’s society without the use of credit cards. Debit cards attached to checking accounts can serve most purposes that many people use credit cards for, and in instances when debit cards aren’t accepted you can find ways around using credit cards. For example, if a car rental company refuses to take a debit card to reserve a car (although many rental car companies actually do accept debit cards) you may be able to put a cash deposit down instead which will be refunded to you when the rental concludes. If it sounds unreasonable to you to have the money sitting around required to put a deposit down, then think of it this way: How much money would you have sitting around if you weren’t paying credit card bills every month? Extra money every month is an attractive goal when you’re trying to find out how to stay out of credit card debt.
