Pam Etuglavu's Financial Advice

How to avoid credit card debt?

Anyone who carries a credit card takes the chance of falling into the debt trap. Credit card debt is one of the hardest debts to repay- as you swipe your plastic, use the following tips to avoid credit card debt.

Keep an emergency fund

Many people wind up in debt because they didn't have the ready cash to pay for medical bills or car repairs, and were forced to use a credit card. Having an emergency fund (at least two months' income) will help to stave off credit card debt by providing that ready cash.

Only charge what you can afford

Many people fall into this trap, thinking of credit cards as "free money". Avoid debt by only charging what you can afford to pay in full during the billing cycle- if you can't afford to buy it outright, you really can't afford to put it on a credit card.

Steer clear of unnecessary balance transfers

If you do a balance transfer, do it for a good reason such as a lower interest rate. If you do a transfer just for the sake of doing it, you run the risk of getting deeper into debt because of balance transfer fees.

Pay the entire balance each month

This is perhaps the easiest way to avoid credit card debt. You won't ever have to worry about meeting the minimum payment, because the balance is paid in full.

Be on the lookout for symptoms of credit card debt

Many people end up in that unfortunate position because they failed to recognize the signs. Stopping them early may keep you out of debt entirely.

Don't use cash advances on your card

If you must do so, there are probably other unstable areas in your finances. Cash advances are seen as an early sign of credit card debt; work on your budget and create an emergency fund so that you won't have to rely on your plastic.

Don't lend out your credit card

When you do, you really have no control over how that person uses it, and even if they promise to pay the bill, you are ultimately the one responsible for the charges. If the person who wants to borrow the card can't get one through legitimate channels, then why would you offer yours to them?

Understand your card/cards' terms and conditions

Read the agreement carefully and understand how your interest will be applied, how you'll be charged, and when interest rates will rise.

Limit the number of cards you carry

The more you have, the more you're capable of spending. Self-control is an admirable trait, but it's safer to keep temptation at bay. Reduce the number of cards you have, and stay out of debt.