How to Avoid High-Interest Credit Card Debt

By Angela Monroe - December 9, 2019

High-interest credit card debt can be stressful and financially crippling. If you currently have credit card debt with high interest increasing your monthly repayments by huge amounts you’ll want to make a change as soon as possible.

 Avoiding high-interest credit card debt could help you to bring down your general monthly expenses by a significant amount. There are some quick and simple steps you can take to move away from high-interest credit card debt and find more affordable, cost-efficient ways of borrowing.

Always read the small print

Yes, it’s boring and lots of people just want to get on and use their new credit card – but reading the small print is essential to stop you from falling into the trap of holding high-interest credit card debt.

Always read through your credit card agreement so that you’re fully aware of exactly how much interest will be applied to your account. You should also be aware of which day of the month you’ll be charged your fee, and when your interest rate increases (this is often after a fixed amount of time having the credit card).

Always keep some savings for emergencies

One of the most common ways that people fall into high-interest credit cards is in an emergency situation when they suddenly need money to pay unexpected costs.

This can be emergency medical situations where expensive procedures or operations are required with no notice, or expenses to do with your car or your home that you hadn’t anticipated. If you don’t have savings, you’re often forced to pay these expenses on a credit card which is likely to have a high-interest rate.

By saving some money each month (even just $10), you can help to build yourself an emergency fund to cover events such as this as and when they arise.

Only buy what you can afford

If you have a credit card, it can be tempting to spend up to and beyond your credit limit  – simply because the money is there. Yet you need to think carefully before you spend and consider whether you can afford to pay the money back at the end of the month. If you can’t, you’ll be forced to pay a high-interest rate on the credit card debt, which can really mount up. Get you credit card purchases under control.

When making a purchase, a good approach is to consider whether you’d be able to buy it that day, in cash. If you can’t, you might want to think twice about the purchase.

Payback loans in full and on time

This is one of the simplest ways that you can avoid getting into credit card debt and paying high-interest rates on the money that you owe. Each month, you should aim to pay back any amount borrowed – in full and on time. This will stop you owing any money on your credit card meaning that you won’t be charged interest on the outstanding balance.

If you’ve only spent what you can afford, paying back your loan in full shouldn’t be a problem. If you have had unexpected expenses which you hadn’t anticipated, try to make sure that you pay them as soon as you can – cutting down on the time that you hold high-interest credit card debt.

Choose your credit cards carefully

Too many people have stacks of credit cards – some of which they never use and many of which they spread payments across without really tracking how much they’re spending each month.

Take the time to streamline your wallet. You need to figure out which credit cards you have and which of them are active or inactive – cancel and get rid of any that you don’t use or no longer need. Once you have worked out which credit cards you do still use on a regular basis, start to look carefully at the interest rates, fees and charges that you may be paying on these.

Don’t be afraid to look for something better – if you’re not happy with your credit card and the terms you have, shop around for a better alternative.

Angela Monroe
Angela Monroe is the Community Manager at The Positive Group, specialising in giving people the information that they need when they need it, and putting you on the path to a fair financial future. She has 8 years of experience in helping Australians find the right finance solutions, and regularly contributes articles to empower Australians with the knowledge they need to become financially healthy.


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