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5 Simple Tips for Avoiding Credit Card Debt



Credit Card Debt

Accumulating credit card debt can feel like riding a bike downhill; unless you find a way to pump the brakes, it’s all too easy to keep coasting toward the bottom. And, you’ll keep picking up speed as you go — due to the compounding interest that keeps accruing on your credit card balances, making them harder to pay off the longer they remain.

Long story short, you’ll do yourself a tremendous favor by avoiding credit card debt. 

Here are five simple tips for doing so.


Pay More Than the Minimum Each Month

It’s tempting to fall into the habit of paying only the minimum amount due on your credit card balances, especially when other financial obligations are vying for your hard-earned dollars. Paying the minimum is better than nothing because you’ll avoid late fees and delinquency. But it will do nothing to stop interest from accumulating on your outstanding balances.


Here’s an example from MarketWatch: It would take more than 30 years to pay off a $2,000 credit card balance with an 18 percent interest rate if you make only minimum payments (two percent of the total balance). Any amount you can pay over the minimum will help you “pause” your debt, as well as reduce it over time.


Cancel Unused Subscriptions

A recent study found that people tend to think they’re spending nearly three times less than they actually are on monthly digital services and subscriptions. The actual monthly average for participants was $237.33, which adds up to $2,847.96 per year.


We’ve all used a credit card to sign up for a subscription service with good intentions — whether it’s an ad-free music streaming platform, a new way to watch TV online, a monthly delivery box filled with goodies, etc. Then we get busy with the rest of our lives and forget about that recurring charge tacked onto our credit statement each month.


Set aside a couple of hours to evaluate all your subscriptions in terms of how much they cost you vs. how much value you get from them. Then make some choice cuts.


Deposit In-Store Savings into Your Savings

When the cashier tells you, “You saved $32.57 today by shopping with us!” it feels satisfying. But you know what would feel even more satisfying and help you work toward your money goals? Actually depositing that amount printed on the bottom of your receipt into a savings account. Debt expert and Freedom Debt Relief co-founder Andrew Housser recommends doing the same for online shopping; any time you’re able to get a discount or bargain, transfer that exact amount into a dedicated account.


You can then use these savings to beef up your emergency fund, pay down your existing debts, or save up for your next big purchase (like a car or vacation). You’ll get that psychological boost and your bank account will reap rewards, too.


Spend Primarily with Cash

If you’re fighting a battle with the temptation to spend on credit cards and losing, try spending mostly with cash instead. This will help you establish firm limits, as your cash supply per category will run out at a certain point. To take full advantage of cash cleanse, you’ll need to budget accurately so you can leave yourself enough money to cover your expenses without leaving so much that you end up overspending.


Avoid Taking on Debt to Earn Rewards

Rewards like travel miles and cash-back bonuses incentivize us to keep buying on credit. However, it’s important to avoid falling into the trap of spending more to earn rewards, only to pay more than the value of those rewards in interest down the line.


Avoiding credit card debt is good for both your short-term and long-term financial health, so heed these four tips.

David Rosales is a Freelance Writer at RemoteLab and Contributor in The Weekly Trends.