8 Tips for Avoiding Credit Card Debt

Americans’ credit card debt totaled $930 billion in the fourth quarter of 2019, a $46 billion increase over the third quarter, according to recent data from the Federal Reserve Bank of New York. At the same time, the proportion of borrowers whose credit card payments were 90 days late or later increased to the highest percentage recorded in almost eight years.

Credit cards come with a certain amount of risk, and growing debt can cause problems ranging from stress and depression to a poor credit score and reduced retirement savings. But when used wisely, credit cards can be a helpful tool for managing personal finances and building credit.

Here are eight tips for staying out of credit card trouble:

1. Create and stick to a budget. This will help ensure you are not spending more money on your credit cards than you can pay off at the end of every month.

2. Remember that your credit limit is not money in the bank. When you pay with a card, you must have money available elsewhere to pay for the purchase.

3. Sign up to receive text alerts whenever your credit card is swiped. These alerts will help you monitor how frequently you use your card and remind you that, while not immediate, money is being spent.

4. Keep your credit card bills organized. Be aware of payment due dates and maintain regular payment schedules to avoid ballooning debt, and protect or even improve your credit score.

5. Set up automatic credit card payments from your bank account so you’ll never be late. If you’re not sure you’ll always have enough to pay in full, set an automatic payment for the minimum amount due, which will also remind you to pay the bill in total. You might even consider paying your bill every two weeks to keep closer tabs on your spending.

6. If you need help minimizing your credit card use, consider contacting a credit bureau to freeze your credit. You can even freeze your credit via smartphone apps. You can always deactivate the freeze when you truly need to use credit for a big purchase or in an emergency.

7. Delete your saved credit card information from accounts with merchants such as iTunes or Amazon. Taking the time to enter payment information manually means more time to consider a purchase before completing your order, which can reduce the likelihood of overspending.

8. Consider keeping your credit cards in a secure location that is not your wallet. If you do not carry your credit cards around with you, you are less likely to use them.

A Certified Financial Planner (CFP) professional can help you manage your spending without accumulating credit card debt. To find a CFP professional near you, visit letsmakeaplan.org. By sticking with a budget and staying on top of bill payments, you can avoid the stress and financial consequences of credit card debt.