At no point in history has credit been more readily available. It’s only a few decades ago that there was no such thing as credit card debt — if you wanted to drive a car, go on vacation, or buy a new shirt, you had to have enough cash. Now it seems like there are a dozen ways to get into serious debt, from don’t pay a cent events on furniture to zero-down car financing. If you find yourself in serious financial trouble, your credit counselor’s job is to help you sort through your options, but the best case scenario is to take steps to avoid getting in too deep in the first place.
Here are some tips to help you avoid debt.
Watch for the warning signs
Pay attention to signs that you’re in imminent danger of becoming a slave to your credit card debts. If you transfer balances from one card to another to keep from having to make a payment, make only minimum payments, are charging necessities like groceries or utilities, or have stopped even looking at your credit card statements, you may be in danger.
Stay away from cash advances
When you put a purchase on your credit card and don’t pay off the balance in full before the due date, you start to incur interest. When you use your credit card for a cash advance, you start paying interest the moment you take it. This usually extends to the cheques many financial institutions issue with their credit cards as well. Cash advances are a danger sign that can lead to a cycle of borrowing and repaying it can be difficult to escape.
Make it a priority to save up enough to see you through an emergency. Whether it’s a car repair or a major health crisis that prevents you from working, life’s twists and turns can lead to financial hardship when you have to use a credit card to bail yourself out. Experts recommend you have enough aside to take care of three months’ worth of expenses.
The more credit you have, the more you may be tempted. If you know you have trouble handling credit, help yourself stay out of trouble by limiting the number of cards you have, and their credit limits.
If you’re starting to suspect you’re in over your head, call a credit counselling professional and start taking the steps necessary to free yourself from the burden of debt.