5 Tips for Avoiding Credit Card Debt in 2017
A new year, a new opportunity to set fresh financial patterns and make smarter monetary decisions!
What is one of the best financial decisions that anyone, whether they’re in debt or not, can make? Avoiding making purchases on a credit card that cannot be paid off at the end of the monthly billing cycle. Credit card that has jumped in grown in leaps and bounds over the past several decades, and American consumers are seeing the results of their credit card debt first hand, by paying exorbitant interest rates or late fees and feeling the strain of financial burden.
Here are five tips for avoiding credit card debt in 2017:
Cut up all but one emergency card.
For the rare consumer who pays off credit card debt each month, and wants to use rewards points or a combination of cards, fine. Feel free to use as many cards as you would like. But the average consumer overextends his reach on credit cards.
The best thing that you can do to avoid more credit card debt in 2017 is to reduce your credit cards to one. Make it the best one, whether it has the highest limit or the best rewards or cash back deals, but keep all of your purchases on this one card. Better yet, don’t make purchases on this card at all! But if you must, at least you’ll know exactly where the money is going. You’ll be able to see exactly how much you’re paying each month, versus how much is going back out. This will also allow you to make payments on remaining cards balances without worrying about adding back to them.
Start small.
Pick the card that carries is the least amount of debt and focus your efforts on paying more than the minimum payment on that one card. It sounds counterintuitive, but financial experts recommend doing this because of the sense of accomplishment and goal setting that it will create. Once you have paid off that one smaller card, you can set a deadline for paying off the next larger amount.
Meet more than the minimum payment.
As your bank records will show, not meeting the minimum payment means that you will pay hundreds or even thousands more over the course of your debt reduction. Paying double or even triple is recommended, if you can swing it.
Don’t fall for “great deals.”
No matter how great the deal, or how good the opportunity is, don’t do it! Even zero percent transfer balance cards are not really worth it, because the chances of paying down your debt in the limited amount of time that those balance transfers offer is low, while the interest rate that kicks once the interest free period is over is very high.
Set a goal for having certain cards paid off.
Goal setting and developing deadlines is one of the most effective ways to reduce your debt. Just like training for a marathon, you’re training your finances to be in better shape. Having a set budget and knowing exactly what money is coming in and out each month is step one in figuring out exactly what you can dedicate to reducing your debt beyond your minimum payment.
Step two is avoiding credit card debt and spending smart, so look for sales and savings, but don’t give into the little square of plastic in your pocket! At the end of the year, when the debt that you owe is greatly reduced, you’ll be glad that you took the effort to avoid more credit card debt in 2017.
You’ll be one step closer to debt free living!
