When it comes to credit card usage, it is no secret that Americans as a whole vastly underestimate how much debt they actually have. In fact, as of 2013, actual lender-reported credit card debt was 155% greater than the borrower-reported balances. And that’s not the only thing Americans are underestimating. The problems that come with ballooning debt can be much worse than even the most pessimistic borrowers realize. That’s why it is important for every credit card user to invest in debt consolidation management to protect themselves.
Looking for credit counseling to help you calculate your debt? Follow these three simple rules to prevent credit card debt from happening in the first place.
1. Do not underestimate the power of a budget
It is incredibly important to establish a budget and to follow it exactly. While it is alright to spend a little extra on splurge purchases once in a while, too much frivolous spending can be detrimental to your credit score. These purchases add up rather fast, so establish a budget at the beginning of the month and stick to it.
2. Carry your credit card balance for the maximum of six months
Even if the interest seems relatively small, when this adds up it can be exceptionally hard to pay off. Take charge of your debt and pay off your credit card balance as often as you can. Keep in mind that your credit card debt is similar to a snowball growing larger as it rolls downhill, so you want to nip it in the bud before it gets so huge that you cannot handle it.
3. Stay away from the reward credit cards
While reward credit cards may seem like a good idea in the first place, they are full of hidden fees and incredibly high interest. It is easy for card holders to spend more than the reward itself because they don’t pay attention to the hidden fees and interest that comes with the card. So staying away from these cards is one of the easiest ways to avoid unnecessary debt.
It is important to take control of your finances to prevent debt from happening in the first place. Failing that, it’s important to accurately calculate your debt. If you feel as if you need professional help to get your finances back on track, contact our experienced debt wranglers at the Debt Management Group today.