Avoid Easy Credit Traps and Stay Out of Debt

What makes credit card debt difficult to avoid is all of the easy credit traps that are set for consumers. Avoid these traps no matter what and you will have a better chance of staying out of overwhelming debt. Here are some common easy credit traps for you to recognize and avoid:

Avoid getting too many credit cards. When your credit score is good, it seems that everyone has a new card with an attractive balance transfer option. But you must avoid getting too many credit cards because they will become too difficult to manage even if the balance does not increase much.

Avoid private label credit cards. These are also known as the store or gasoline credit cards. They are attractive in that you can get the store’s card and take home your purchase all in the same day. But their payments and interest are both higher. And if you pay them off, they can remain on your credit report as an open account and actually work against your good credit profile.

Avoid credit cards altogether and never get into debt. Do you want to really stay out of bad debt? Get rid of all your credit cards or don’t get any to begin with. This may not be realistic but a credit-card-free lifestyle is certainly worth pursuing. Of course credit cards are needed for things like renting cars and shopping online but you might be able to do just as much with debit or pre-paid credit cards instead of accumulating debt.

Don’t be lured in by 90 days same as cash. Why would a store offer “90 days same as cash” if there was at least a reasonable doubt that most customers will never pay it off in 90 days? A close cousin to this lure is the 0% financing for 12 months if you buy the item on the store’s credit card. Or, some stores offer no payments for 12 months but interest accrues after 90 days. All of the schemes are designed based on the fact that most people don’t take advantage of them yet they still think they got a better deal.

Avoid “trading up” your currently-financed automobile. You’ve been making payments on your automobile you bought new for about 3 years now. Then, one day you happen to be browsing the new cars and a salesperson tells you that you can trade in your vehicle and use the equity as a down payment for a loan on a newer and more expensive model. The car payments and insurance go up and you are stuck in debt because of an automobile much longer.

Avoid getting quickly into debt with a new car after paying off your old one. See how good it feels to not have a car payment. If you take care of the vehicle you did buy new, it will last you many years even after the loan is paid off.

Avoid saying “yes” when you should be saying “no.” Learn to tell your kids “no” more often and not buy everything they want. Buy what they need but scrutinize what they want. If you don’t start the habit of saying “no” when your children are young, it will only get more expensive as they hit their teenage years and want you to buy them a car and other luxury items you cannot afford.

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