How to Prevent and Reduce Credit Card Debt

Your credit card does have some benefits like cash rebates, bonus points, airline miles and free gifts, but if you are not careful with how you use them, you could get into financial trouble and ruin your credit history as well.

Financial experts offer the following advice to prevent or reduce credit card debt:

Credit card statements often include a “minimum amount due” in your billing statement, making you feel safe about not paying off the entire balance. Truth is, by not paying the entire amount due, you get charged for interest on the balance, so you actually end up spending more.

It makes good financial sense to pay all your bills on time all the time. Late payments are often charged high penalties that you could easily avoid by being prompt. Set up automatic payments or reminder systems to avoid late payment.

Having more than 1 card means greater spending capacity that can be a problem if you tend to max out all your cards. While keeping more than 1 card can come in handy for safety reasons such as when your usual card is lost, damaged or stolen, experts advise that you should only keep as many cards as you feel you can manage responsibly and get rid of or cancel the rest.

Credit card applications are generally accompanied with terms and conditions such as the interest rate for unpaid amounts, payment due dates and cut off dates, and your credit limit. These conditions can appear in fine print that many neglect to read. Being familiar with the important details of your credit card allows you to manage cut off and payment dates wisely.

If you’re already having trouble paying off your card bills, you need to work out a budget detailing your sources of income and expenses. This allows you to see where your money is going so you can identify your spending priorities.

Using your credit card responsibly not only frees you from credit card debt with its burdensome interest and penalty charges but it also protects your credit history which may one day help you get decent rates for that important home or car loan.