With Debt.org stating the greatest sources of millennial debt are from credit cards (20%), and almost half of older consumers carry a debt of $2,500; credit card debt can be a “silent killer”.
Getting that monthly statement can feel like a nagging burden, so here are 6 ways to avoid getting into a (bigger) credit card debt.
Buy What You Can Afford
While this might sound like common sense, it’s so easy to swipe a payment when you don’t actually see cash being paid. If you’re making a credit card purchase, always rationalise the value of the object with its cost. Other than that, it’s always good categorise your buys into “Wants VS Needs” for better tracking of your expenses.
Have An Emergency Fund
Most credit card debt comes from the accumulation of big-ticket items or unexpected purchases; such as renovations, car accidents, housing items, and more. Start the habit of saving up in your
“Emergency Fund” for big or sudden purchases rather than swiping it on your credit card at the last minute.
We must consult our means, rather than our wishes.
– George Washington
Always Pay On Time
Most debt increases as you delay payments (or are simply paying the minimum each month). Once you have paid off all your current debt, make it a habit to pay your balance in full each month to avoid crazy interest rates. Alternatively, you could try to pay a little more each month than the minimum payment to quicken the debt repayment.
Remember To Redeem Points
Other than reducing the debt, another way you could maximise your purchases would be to redeem your points. Whether it’s to convert your points to cash, or redeem your credit card points for vouchers, items – make a quarterly reminder to redeem them.
Avoid Cash Advances
While it might be a great convenience to charge cash advances on your credit card, it might come with a hefty price tag. With an upfront processing fee (about 5%-6% of loan) and an interest rate (about 24%-29%), cash advances are extremely expensive to begin with.
Limit The Cards You Have
If not having a credit card at all is out of the question, try to reduce the number of cards you have. It’s simple sense – the fewer cards you have, the less amount you’re going to spend, the less debt you’ll have.
