Easy Ways to Prevent Excessive Credit Card Debt

/ BY / Credit 101

With the average household in the US carrying just under $16,000 in credit card debt, it's easy to see how credit card debt can accumulate quickly. However, excessive credit card debt can lead to serious financial problems. The strain of too much debt not only affects your household finances, but your credit score, ability to obtain credit, and even your relationships personal life.

The best way to avoid excessive credit card debt is to control your card usage and spending habits. Some of the easiest ways to prevent excessive credit card debt include:

Pay off your balance as soon as possible.

Paying off your balance is the best way to avoid excessive credit card debt. In the very least, paying it down to under 30% of the limit will keep a high balance from affecting your credit score. If you carry a large balance, this will be more difficult to do, but it's still possible. Budget extra money each month to go towards paying down your balance, and make sure you pay more than the minimum amount - even $5 or $10 extra will make a big difference.

Make all your payments on time.

Credit card companies make billions of dollars each year in penalty fees alone. These fees, including over limit fees and late payment fees, can run your balance up and cause additional financial hardship. Fees on multiple cards can add up to hundreds of dollars a month, making it impossible to catch up. You can avoid this by making sure you pay your bill on time every month without fail. Set up automatic payments online so you don't forget, and monitor your card usage so you never go over the limit.

Reserve your credit cards for emergencies.

An obvious way to prevent excessive card debt is to avoid using your card altogether, or to reserve it for emergencies only. Some people find it useful to keep their credit cards out of their wallets or purses in a safe deposit box so they don't have access to them. Only turning to your credit card for emergencies will help eliminate unnecessary spending and keep you from running up your balances.

Opt out of credit card offers by mail.

We all get them - credit card offers by mail that promise no interest for six months, free balance transfers, and other enticing perks. You can remove this temptation altogether by opting out of all credit card offers by mail. To opt out for five years, call 1-888-5-OPT-OUT and follow the prompts. To opt out permanently, visit the FTC's website, which provides detailed instructions for opting out of these prescreened offers.

In addition to removing the temptation, opting out also removes the risk of identity theft, which often occurs through such mail offers stolen out of mailboxes.

Don't sign up for in-store credit cards.

In-store or department credit cards lure consumers in by promising a percentage off their first purchase, cash back, or discounts on all purchases. While this can be tempting, it's best to avoid them altogether. Many people sign up for these cards for the initial discount and intend on paying off the balance immediately. However, this seldom if ever happens and many people find themselves carrying a balance or turning to their credit card to make purchases they could not otherwise afford.

Credit cards can come in handy, but they can also cause serious financial problems if you're not careful with your spending habits or don't monitor your credit card usage. These easy tips can help you prevent credit card problems before they begin.

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Please note your financial situation is unique and our tips & advice presented here may not be appropriate for your situation. CreditCardXpo.com recommends that you seek different advice & opinions from your own accountant or financial adviser who understands your individual circumstances before making any important decisions or implementing any financial strategy.