I Use These 3 Foolproof Strategies To Avoid Credit Card Debt

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Some of my favorite things about credit cards are that they allow you to spend flexibly, to get rewards that range from travel to cash back and to avoid hardships associated with having a short-term financial shortage or emergency. Arguably one of the worst things about them, though, is how expensive it can be when that convenience becomes long-term credit card debt.

Read: 10 Ways To Bounce Back From a Heavy Spending Month on Your Credit Card
See: What Not To Do While Trying To Get Out of Debt

You can avoid getting into credit card debt by canceling all of your cards, but that leaves you fewer options in case of emergencies. It also hurts your credit score, meaning you’ll have less access to things like mortgages and car loans — the kinds of debt most people need to navigate life.

Instead, use your credit cards wisely by adopting my three best strategies to keep credit card companies working for you — through mechanisms like cash back on purchases — instead of you serving them.

The Best Strategies To Avoid Getting Into Credit Card Debt

1. Run the Numbers

One of the better ways to be responsible with your credit cards is to stay on top of the various numbers associated with your cards. For example, make certain you know your annual percentage rate (APR), the dates of grace periods for purchases, what dates you might be hit with a finance charge and how much interest you might pay in a given month if you carry a balance.

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Beyond that, most cards have both tools and traps for their users. Knowing these will help you reduce expenses both with your card and with other things on which you spend money. Some of the most common include:

And, of course, keep a close eye on how much you spend using credit cards, compared to how much you can afford to pay off before the end of your grace period. You don’t want to carry a balance, whenever possible.

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2. Only Use It as a Credit Card

If you stick with making simple purchases within your budget, it’s hard to get caught by unexpected fees or charges. However, credit card companies offer some services for which they charge a premium fee. Those fees can add up quickly, putting you in credit card debt when you didn’t expect it. The three most common of these services are:

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Maintain an emergency fund instead of relying on your credit cards for sudden situations. That will avoid the need to use these tempting but costly offers.

3. Practice “Credit Hacks”

Beyond the larger topics I mentioned above, there’s a host of smaller practices you can use to keep your credit card liabilities low. Some of them apply to everybody. Others apply to only a few. But you should read them all, and see which ones you can use to keep yourself on the straight and narrow:

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Budgeting 101: How To Create a Budget You Can Live With

Final Thoughts

As with so many other things in life, the key with credit card debt is moderation. Use credit cards to make your financial life easier, while resisting the temptations that would lead you to carry any kind of debt. Allow yourself to spend with a credit card only when it’s smart, while “buckling down” when it’s less sensible. Use your credit cards as tools and avoid turning them into toys.

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