The problem arises when the very convenience provided by a credit card is used to accumulate unnecessary debt. The average household with revolving credit card debt in the US had an average balance of $6,849 in 2019. Another $1,162 was owed in average interest every year. 

This kind of credit card debt can prevent you from saving for your future. To avoid this from happening, here are our suggestions for using your credit card sensibly:

1. Avoid opening too many credit card accounts within a short period

You’ll be offered lots of credit cards with attractive features by banks and credit card companies. However, opening too many lines of credit increases your chances of accumulating debt. More credit cards would mean more payments and the need to keep track of them. 

Besides, opening so many accounts within a short period can have a negative impact on your credit score. As a result, you may be denied credit for months. It is, therefore, extremely necessary that you don’t open too many accounts within a short period.

2. Understand the terms of your credit card

Don’t be in a hurry to make your first purchases as soon as you receive your credit card. Go through the details of the credit card agreement carefully. This will help you avoid any unexpected fees. Different types of credit cards have varying percentages of fees and interest rates. 

You must know when you’ll be charged a fee and how interest will be applied. It must also be known when the interest rates would increase. To avoid these things, choose a credit card that’s appropriate for your financial goals and spending habits.

3. Spend wisely

You must make sure that you’re spending within your means. With the help of your credit card, you can pay for larger purchases and build a good credit score. To make this possible, it is important to pay your balance in full every month. You must not use your credit card to buy things that you can’t afford. 

If you do, you’ll find it difficult to pay off the amount within your billing cycle. Only make purchases for the amount that you can pay off within the card’s billing cycle.

4. Make timely payments 

Along with paying monthly towards your credit card bills, make sure your payments are made before the due date. You must ideally pay in full. If this is not possible, pay as much as you can. Don’t just pay the minimum amount stated in the bill. Today, most banks allow you to set up automatic payments. This feature facilitates the transfer of a set amount to your credit card every month on time. 

Paying before the due date prevents additional fees from being charged on the late payments. If your budget allows, you can also make two or more payments every month.

5. Keep the utilization ratio low

If you’re not paying the balance in full every month, keep a low utilization ratio. For instance, let’s say you have a credit line of $6000. Now, if you’ve made $3000 worth of purchases on your card, the utilization ratio amounts to 50%. This high percentage of users would make it difficult for you to pay off the debt. It would be a lot better if you have a utilization ratio of 30% or less.

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Such loans have a lower rate of interest and more favourable repayment terms. A debt consolidation loan can be an effective tool in dealing with credit card debt, personal loans, and other liabilities. Most individuals apply for such loans through credit unions or banks. Applications are usually approved if you have a good relationship and payment history with the financial institution.

Major types of debt consolidation loans

Generally, there are two types of debt consolidation loans. They have secured loans and unsecured loans. Secured loans are the ones that are backed by one of the assets owned by the borrower. This can be a house or a car, which works as collateral for the amount borrowed. On the other hand, unsecured loans are the ones that are not backed by any assets. 

Such loans usually have higher rates of interest and are of a lower amount. There are differences in the interest rates charged in both these types of loans. However, they’re still lower than the interest rates charged on credit cards. The rates are fixed in most cases, which means they do not vary over the period of repayment.

Other ways of consolidating debt

Besides secured and unsecured debt consolidation loans, there are other ways of consolidating debt. One of them is to get a new credit card. It would be a lot more beneficial if this new card charges little or no interest for a specific period. Using this credit card, you can consolidate all your credit card payments into this new card. Your home equity loan or home equity line of credit can also be used for debt consolidation. 

Individuals with student loans can also benefit from certain consolidation options provided by the federal government. This is known as the Federal Direct Loan Program. The new interest rate in this case would be the weighted average of the earlier debts. It must be noted that private loans won’t qualify for this program.

Debt consolidation requirements

In order to qualify for debt consolidation, you need to have sufficient income and creditworthiness. This is especially true if you’re approaching a new lender. The types of documentation required would depend upon your credit history. The documentation required includes a letter of employment and two months’ statements of existing credit cards or loans. 

You might also require letters from creditors or repayment agencies. Upon getting your debt consolidation plan, you must consider whom to pay off first. In most cases, this is decided by your lender.

Effect on your credit score

A debt consolidation loan might enhance your credit score in the long run. You can keep interest payments low by paying off the principal portion of the loan sooner. A boost in your credit score would bring you certain benefits. It would also make it easier for you to get a loan or credit card in the future.

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The gambling industry was estimated to be worth $110 billion in 2020. What’s even worse is the fact that gambling gets more than 20 million Americans into debt. In order to pay for their losses, these individuals borrow money from different sources. Savings accounts, credit cards, and retirement funds are some of them. 

They do it with the hope of winning that one big amount that would clear their debts forever. Instead, the pile of chips become a pile of debt for most of them. Now, the biggest question is how to avoid getting into debt from gambling? Here we’ll explore some of the tried and tested ways:

1. Bank controls

There can be a sense of embarrassment in you to tell your bank that you have a gambling problem. Nevertheless, you must contact your bank so that they can come to your rescue. Banks can help you in many ways. They can temporarily put a freeze on your card to prevent you from spending on gambling. 

Another way in which they can help is by switching off your cash withdrawals for a certain period. They might also consider limiting the amount of money you can withdraw from the ATMs each day.

2. Creditors’ plans

If you’re already in a lot of debt and struggling to pay back, speak to your creditors. This must be done on priority before things get worse. You must understand that they can only help you if you tell them about your situation. Creditors might include your local council, loan providers, credit card companies, mortgage lenders, and your landlord. 

They can help you with an affordable payment plan. You can explain how you’re going to stop gambling in order to convince them.

3. Notice of Correction

You can add a note to your credit file, which is also called ‘Notice of Correction’. In this note, you can tell your potential lenders not to lend to you. This must be done when you feel that you’ll be applying for credit to pay for your gambling activities. By adding the Notice of Correction, your potential lenders would know what to do.

4. Responsible gambling

Some of the popular casino review websites promote responsible gambling. It is an initiative to educate gambling enthusiasts about the dangers of gambling addiction. So, if you want to play online casinos without getting into debt, check out Casinos Jungle. It is an immensely popular casino review site that has some excellent resources for players of online casinos. 
Under the ‘Guides’ tab on this website, you’ll find a section called ‘Responsible Gambling’. It acts as a guide for new as well as experienced players with regard to playing responsibly. This section takes players through some steps that they can take to make playing online casinos safe and fun. For further details,  visit www.casinosjungle.com.

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