Debt is inescapable for regular Americans. Going to university has gotten too expensive for households that earn an average income, so they have to take out a loan to afford tuition and other fees. Adults who want to settle down and buy a house need to acquire a mortgage to pay for the property. Those who want a car also borrows from a lender.
Sometimes, they gain another debt in order to pay for an existing balance. It is not always a bad idea.
For homeowners, refinancing their mortgage is the act of taking out another loan to pay for an existing one. Usually, people do it to take advantage of lower interest rates and save hundreds of dollars per month. Others may want to pay off their mortgage sooner.
However, some fall into a cycle of debt. When the bills pile up, they borrow more money to pay off the current debt.
Credit Card Debts Becoming a Problem
The careless usage of credit cards is increasingly becoming a problem. It is a form of debt that has high interests so, if a person defers payment, their balance increases significantly. It becomes harder to clear over time.
The Federal Reserve Bank of New York revealed last February that the total credit card debts of Americans reached $930 billion in 2019. That is a $57 billion increase from the year before. Credit card delinquency, when the consumer falls behind on making the monthly payment required, also increased to 5.32%.
Younger Americans aged 18 to 29 have a higher percentage of delinquency, but older adults also miss payments, too. The rate of credit card delinquency among the 60 and above age group is 4.34%.
It is a cause for concern, but credit card use is not waning. People still rely on their credit cards to acquire products and services. Here’s how to stop if you are in debt or do not want to be in debt.
Use Cash
The primary reason why people use credit cards is convenience. Swiping a card at the till is a lot faster than fishing for coins in your pockets or handbags while a line of irate customers forms behind you.
So, to stop using credit cards, just leave it at home. You would have no choice but to take out your wallet and use cash for payments. ;
Using cash is a lot better for your bank account. With cash in hand, you know exactly how much you have and how much you are spending. It would be easier to track your spending when you see money going out of your wallet.
Use a Debit Card
If carrying around cash does not sound appealing to you, you can still have the convenience of a credit card to pay for resources by using your debit card.
By using your debit card, you are taking money out of your bank account. You are spending money you earned, not gaining debt.
It is easier to keep track because, as soon as the money in your account runs out, your card will be declined. You would not be able to make more purchases.
Hide Your Credit Card
Make your credit card more difficult to use. Keep it away from you so that, when you are about to make a purchase, it would be more inconvenient to pay with the credit card. You would be more likely to delay buying or not buy at all.
Store your card in a cabinet with a lock and hide the key somewhere else in your house that far away from you. Put your credit card on top of shelves where you cannot reach it. Freeze your credit card in a block of ice if you need to. Treat your credit card as an item that has to be hidden, even from you.
Check Your Credit Card Statement Regularly
You may not have noticed it, but someone else may have gotten access to your information and you have been paying someone else’s payments. Unauthorized payments happen regularly. When an online merchant’s security is breached, customer data, including credit card information, may get leaked. Individuals and groups with ill intent may get access to your credit card information.
It will also allow you to spot payment to services that you have forgotten about and no longer use. Nowadays, it is easy to sign up for a one-month free trial. Although you have not used the service, you will still be billed for it if you provided your credit card information.
You would not eliminate your debts by simply stopping yourself from using your credit card. It will only help you get your finances in good condition so you can clear your existing debt and not make new ones.
