Credit cards are a great tool that helps consumers deal with unplanned expenses and emergency situations. However, credit card spending can easily get out of control and drown you in debt before you even realize what’s happening. Can this be prevented? Of course. Here are some bizarre ways your credit card debt can spiral out of control and how you can avoid them:
1. Impulsive buying
As many credit card holders before you have proven, impulsive buying is one of the fastest ways to get drowned in debt. It is rather bizarre because in a lot of cases, items bought on impulse often end up not giving the buyer satisfaction, if not entirely forgotten or discarded. If you have the tendency to spend on things you don’t need, it is definitely not the best idea for you to own a credit card. If you are already a cardholder, best to leave your card at home when you know you don’t need to use it.
2. Grabbing any promotional offer
Sensible people know better than to avail of any promotional offer that comes their way. Whether it is your credit card company offering special interest rates, or your favorite retail store offering big discounts if you make a purchase that reaches a certain amount, you need to remember that everything—even special offers—come with a price. Be extra discerning and do not be so quick to sign up for the latest bargain that comes up.
3. Having too many credit cards
Having one credit card is enough headache; it’s a wonder why some people choose to own three or more. Unless you possess exceptional self-control and phenomenal budgeting skills, having multiple credit cards is nothing short of a ridiculous idea.
4. Spending beyond your means
You don’t need a degree in economics or finance to know that spending more than what you are earning only gets you in deep financial trouble. And yet, a lot of people live under the illusion that they could somehow catch up with their credit card payments when they charge items they could not normally afford on credit.
5. Ignoring terms and conditions
Every sensible consumer tries to get all the information available before paying for any product or service. It should be the same way with credit cards. Before you even begin using your card after being issued one, it is only common sense that you read all the terms and conditions. Failing to do so could cost you money, believe it or not. For instance, the 0% interest promotion that came with your card is likely to have an expiry date, which you would not have known if you did not read the fine print.
6. Making only minimum payments
Paying only the minimum on your monthly credit card payments actually causes you to lose more money. The unpaid balance is carried over to the next month and subjected to interest to create an effect called “snowballing.” Why then, do banks allow you to pay only minimum? Because they earn more when you do, that’s why. It’s time you wake up to that realization.
7. Making major purchases on your card
It doesn’t make sense to purchase or partly pay for a car using a credit card but some people have done it or are still doing it. Credit cards are great for grocery or clothes shopping, as well as for buying things online. Unless you have funding to back it up, do not make an overly huge purchase on credit.
