Not all credit cards are created equal. While some come with exorbitant interest rates and fees, others offer a plethora of benefits in the form of rewards and consumer protections. Regardless of the type of credit card you own, exercising discipline in your spending habits will help you keep the debt balances low.
Avoiding Excessive Credit Card Debt
There are a number of tips and tricks you can try to avoid accruing substantial credit card debt.
1. Set Ground Rules
Each time a credit card arrived in the mail, did you establish a set of ground rules pertaining to weekly or monthly expenditure limits? If not, it may be worth considering, especially if you are not disciplined enough to play by the rules and don't want to have to resort to drastic measures to curb overspending. Nerd Wallet recommends compiling a list of permissible expenditures and only spending an amount you can comfortably pay off each month prior to the accrual of interest.
2. Know Before You Go
Before stepping foot into a store or making an online purchase, make a list of all the items you intend to purchase and stick to it. This prevents you from purchasing excess items simply because they are on sale or would make the perfect Christmas gift for your favorite relative. Likewise, if you insist on taking advantage of what appears to be the deal of a lifetime, use cash or leave it in the store.
3. Track Spending Using a Smartphone App
If a frequent review of your recent transaction history does not serve as a deterrent to stop swiping, a spending tracker smartphone application may be worth considering. Forbes recommends apps, like LearnVest and Mint, which track spending patterns by aggregating expenditures and enabling you to file them in folders to identify areas that may need improvement. While these apps do not magically deactivate your card once you have reached a certain amount of expenditures for the week or month, they definitely provide you with a candid view of where your money actually is going. That way, you can identify problematic areas and make the necessary adjustments.
4. Request a Lower Credit Limit
Even if you start out with a lower credit limit, credit card issuers may increase it once you demonstrate responsible usage over time. However, it is in your best interest to reject any subsequent boosts to the credit limit if there is a chance you will spend more than you can comfortably afford to cover each month. Otherwise, you risk becoming saddled in debt or incurring excessive charges and fees should you exceed the credit limit. So, instead of cutting up your cards only to reorder them when the urge to go on a shopping spree kicks in, lower the credit limit to avoid completely the possibility of entertaining the temptation to spend money you do not have on hand.
5. Delete Account Information Online
If you're an avid online shopper, there's a possibility your account information is stored in the system by merchants you frequently patronize. On the other hand, your computer may automatically populate certain fields, such as your name and address, to expedite the checkout process. However, deleting any stored account information and disabling the auto-fill features will help curb impulse purchases. You will no longer be able to add items effortlessly to a virtual shopping cart and tap a single button to complete the transaction.
6. Place Credit Cards in a Safe
Instead of carrying the credit cards in your wallet, stow them away in a safety deposit box at your financial institution. While it may be tempting to pick up a small safe for your home from the nearest office supply store, having to head to your safety deposit box each time you have the urge to use a credit card should limit credit card expenditures. You even may forget the credit cards are there and find a substantial amount of time has passed without having used them, notes Lifehacker.
7. Put Them in Peanut Butter
You may have already tried freezing your credit cards in a block of ice, but to no avail. However, stowing them away in the bottom of a sticky jar of peanut butter should do the trick. It is much more difficult and messy to wash away the peanut butter and remove any sticky residue from your hands than it is to run hot water over a credit card frozen in a block of ice. The time it takes to undo the damage should be ample enough to "make you reconsider that pair of shoes" or any other impulse purchase, The Motley Fool adds.
8. Close the Account
Canceling a credit card can have serious implications for your credit rating if the card accounts for a substantial amount of your total available credit. However, you can use closing an account as a last resort, even if it means missing out on credit card rewards, which could be the culprit for the excessive balances in the first place.
Paying Down Your Credit Card Debt
Even if you have recently taken the proper precautions to avoid credit card overspending, dealing with existing debt can be overwhelming. But by implementing a stringent debt-repayment plan, you will be one step closer to achieving financial freedom.