5 Ways to Avoid Credit Card Debt
If you’re struggling with credit card debt, it can seem impossible to avoid being sucked into more debt—especially if your bills are piling up and you’re stuck paying interest on past charges that you can’t pay off right away. However, there are several strategies you can use to avoid getting further into debt while you focus on paying down your existing balances. For example, consider implementing these five ways to avoid credit card debt.
What happens if I don’t pay my credit card for 5 years?
If you don’t pay your credit card debt, your credit score will drop significantly and you could end up paying much more than you originally owed in interest. If you want to avoid going into credit card debt, here are 5 things you can do
1) Prepaid cards
The first step in avoiding credit card debt is setting up a prepaid credit card and funding it with an amount that’s less than your minimum balance. This prevents you from overspending and allows you to avoid accumulating more credit card debt. Using a prepaid card, you can only spend what you put on it, so there are no late fees or over-the-limit charges that could ruin your good credit score.
2) Get control of your spending
Take control of your finances by tracking your spending. Create a budget and track where your money is going, then use that information to make better financial decisions in order to avoid credit card debt. It’s easier than you think, and it can have a huge positive impact on both your finances and your credit score. Track spending using a financial planner mobile app and web interface, or sign up for an online service such as Mint or You Need A Budget.
3) Calculate the cost per use
The first step toward avoiding credit card debt is calculating how much you pay per time you use your credit card. Credit cards are simple tools, with just one basic function: buying stuff. If that sounds weirdly simple, it’s because it is; in order to avoid getting into trouble with your credit card, then, you need to make sure you have a healthy relationship with that singular function of your credit card.
4) Choose low-interest cards if you have bad credit
It’s best to avoid credit card debt in general—credit cards with high-interest rates are an especially bad idea. Look for cards that offer low introductory interest rates if you have bad credit. These low-interest offers often come with higher than usual fees, so consider your other options if you can. Getting back on track with a good credit score is important in avoiding future mistakes and improving your financial stability; it could also save you money when shopping for things like a car or home loan.
5) Cut up your card(s)
The fastest way to avoid credit card debt is simple: Cut up your cards. Simply put, if you don’t have a credit card, you can’t spend more than you have on it. If you can’t make that radical move, consider cutting back your daily spending. At 2% cash back, some rewards cards do offer benefits over time—but remember that credit cards have a price too.
Can you get rid of credit card debt without paying?
You’re allowed to escape credit card debt without paying, but there are a couple of things you need in order to do so.
- A high credit score.
- Quick access to cash.
If you have both, then it’s possible for you to escape your credit card debt without paying by making low-interest payments on it over time and avoiding new purchases with your cards.
Is there such thing as credit card forgiveness?
Some credit card companies will forgive debt in certain cases (i.e., if you lose your job, become disabled, etc.). This is rare though and not something anyone should count on. If you’re worried about how to avoid credit card debt, start by being responsible for your spending and consider paying off your balance in full each month.
What is acceptable credit card debt?
No one wants to find themselves in credit card debt, but there are degrees of it. When most people think of their debt, they only look at how much they owe versus their available credit. This is a big mistake—your credit score should be taken into account as well. Ideally, you want your total debt to represent less than 10% of your available credit, and your minimum payment-to-credit ratio should also be below 25%. If either number is over these amounts, you may have bad or unhealthy debts.