How to Stay Out of Credit Card Debt for Good

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Why you might be mired in credit card debt could be chalked up to any number of reasons: a series of unfortunate circumstances, chronic debt denial, or poor spending decisions, to name a few. With the average credit card debt in the U.S. hovering at $5,331, over time, carrying a balance can cost a pretty penny in interest fees.

What’s more, a recent survey reveals that nearly one-third of Americans have more credit card debt than emergency savings. Avoiding credit card debt altogether could help you be able to save for a rainy day, or make it easier to hit some of your other money goals.

It may not be possible to completely avoid debt - things may just happen that are out of your control. But, by understanding the most common reasons people fall into credit card debt, you can take steps to avoid racking up unwanted debt.

prepare for Financial Emergencies

Life happens. A hefty medical bill, job loss, major car repair, and urgent dental work could have you digging a debt hole. It turns out that medical bills are the leading cause of bankruptcies in the U.S. Add a couple of these big-ticket bills to your credit card balance, and it could take you years to pay that balance off, especially if you’re only making the minimum payments on your cards.

What to do: If you already are carrying high-interest debt in the form of a credit card, save up a bit of a cushion before aggressively tackling your debt. While some might suggest paying off your credit card debt before you save for an emergency fund, if you have some money saved aside for the unexpected, it could prevent you from falling deeper into debt.

Avoid Overspending

There could be a number of reasons why you’ve been spending more than you can reasonably afford to. Perhaps you spend to fill a void: you might waste money out of boredom, anxiety, or to keep up with appearances. Or it could be simply that you put a few purchases on a bunch of cards, and failed to keep track. Whatever the cause might be, if you make excessive purchases, you might find yourself paying for your past well into the future.

What to do: If you aren’t currently tracking your spending, there are a handful of free money management apps on the market these days. A few you can check out are Clarity Money, Mint, and Buxfer for starters. Monitoring your cash flow is only one half of the equation. You’ll also need to create a spending plan, more commonly known as a budget. A spending plan can help you to not only live within your means, but to live more intentionally.

If you find yourself overspending, find ways to cut back. You can save on everything from transportation to groceries. Or maybe you can start to earn more by taking on a side hustle, selling unwanted items in your closet, or working more hours at your current job.

Plan for Larger-Than-Usual Expenses

Common peak spending times are the summer, back-to-school season, and the holidays. According to the National Retail Federation, consumers spend on average a bit over $1,000 for the holidays. And if you or your kids are returning to school in the fall, you’ll be shelling out extra dough for computers, supplies, books, and maybe a back-to-school wardrobe.

What to do: Create a spending plan just for these spend-heavy times of the year. What are the additional expenses, and how can you prepare accordingly? Is there any way you can cut back? Or maybe save in advance for anticipated spikes in your budget?

Avoid Carrying Too Many Cards

Especially if you have decent credit, and the offers keep coming in the mail, you could find yourself with more cards than you know what to do with. Put a couple of big purchases on each card, and you could find yourself carrying a hefty balance before you know it.

What to do: Keep close watch on how much of a balance you’re putting on your cards. Try to check your balance at least once a week. You can also set alerts if your balance exceeds a certain amount, or temporarily “pause” your cards so you can’t make any additional purchases.

If having a handful of cards might be too tempting, consider closing cards you no longer use. When closing your credit card, it typically negatively impacts your credit score. The size of the impact depends on a number of things: how many cards you have, what the credit limits are, and how long you’ve had those cards.

If you’re not comfortable with closing your credit cards, safely stow them away and pretend you never had them. You could make one purchase a year to keep them active.

If you're having trouble with your existing credit card debt, or are trying to avoid ways to rack up more debt, Money Management International (MMI) can provide guidance and resources. We can work with to come up with tactics to stay out of debt and pay off your debt altogether.

Tagged in Budget tips, Reducing expenses

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Jackie Lam is an L.A.-based personal finance writer who is passionate about helping creatives with their finances. Her work has appeared in Forbes, Mental Floss, Business Insider, and GOOD. She blogs at

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