Americans are carrying more and more credit card debt every year and for many, the burden is too great to bear. With so many more people taking on this debt every year, it also means more lawsuits are being filed every year by creditors and debt collectors against borrowers. For many people, the judgments issued in these lawsuits are devastating and for some borrowers, the only way out is to file bankruptcy.
Bankruptcy is a good option for those who are carrying too much debt, but it should only be used as a last resort, as this option also comes with some consequences. The best way to avoid a debt lawsuit is to simply not incur too much credit card debt in the first place. While this may sound difficult, our Fort Lauderdale debt defense lawyer offers some simple tips that can make it easier.
Create a Safety Net
The best safety net you can have is an emergency savings account you can tap into in the event that unexpected expenses come up, such as major car repairs or medical bills. Ideally, your emergency savings account should have enough to cover six months of living expenses. However, everyone has to start somewhere so even if you only start with $500 or $1,000 in your emergency savings, this can still be enough to provide for those expenses without using a credit card.
Only Purchase What You Can Really Afford
Many people think they can afford to make a purchase on their credit card because they can repay it over time. Unfortunately, if you have to do this, it means you cannot afford the purchase. Rationalizing that you can make payments over time to repay the debt is essentially just giving away your future income. So, how do you know if you can really afford to make a purchase on your credit card? Determine if you have enough cash, either on you or in the bank, to buy the item. If you do, you can likely afford it and can use your credit card for the purchase.
Do Not Make Unnecessary Balance Transfers
Sometimes, it makes sense to transfer a balance from a credit card with a high interest rate to one that has a lower interest rate. After all, you will pay less in interest, reducing the amount of overall debt you have to pay.
However, you have to be careful when making balance transfers. For example, if you simply want to beat the credit system and you transfer a payment to avoid a payment due date, this strategy could backfire. Transferring balances repeatedly while you avoid paying a substantial portion of the debt will lead to a balance that continues to increase on the card you transfer the balance to, particularly after the balance transfer fee is added.
Make All Payments on Time
To prevent credit card debt, and avoid bankruptcy, you may stay on track with all of your credit card payments. If you do not make even one payment, the next payment due is going to be much higher, as it will constitute the payment you missed, the new payment, and any late fees you incurred. This makes it incredibly hard to catch up, and it will also place a strain on your budget. Once you are in this position, you will have to rely on your credit cards even more, putting you further into the hole.
Pay Off Your Full Balance Every Month
This is probably the number one piece of advice given to those who are trying to avoid credit card debt. However, it bears repeating any time you are considering how to lower your payments and get yourself out of debt. If you have a zero balance at the beginning of every month, you will never have to worry about getting in over your head with credit card debt.
Identify when You are in Over Your Head
If you are regularly spending more than you earn, have received default notifications, or have used one credit card to pay for another, you are likely in over your head financially. To avoid falling even deeper into debt, you should recognize the signs that you are in over your head so you can take action as soon as possible.
Do Not Take Out Cash Advances
Using a credit card is always expensive, but there are some ways of using it that are more expensive than others. One of these is by taking out a cash advance. If you use your credit card to take out cash, the creditor will likely start charging you interest from the day you take out the cash, instead of at the end of the month, as they usually do.
Do Not Let Anyone Use Your Card
This one may seem like common sense, but you should never let anyone else use your credit card. While your intentions may be good, you will still be responsible for the debt they incur, even if they refuse to repay you.
Know the Terms of Your Agreement
The best way to understand the interest rate you will pay, the fees the creditor will charge, and more, you understand the terms of your agreement. Simply by knowing these terms, you will know more about your credit card, and how to avoid using it so you do not get too deep into debt.
Limit the Number of Cards You Carry
Simply put, the more cards you carry, the greater chance there is that you will get too far into debt. Generally speaking, you should only carry a maximum of three credit cards. This will give you two to carry on you, and one to keep in a safe place in case of emergency.
Call Our Debt Defense Lawyers in Fort Lauderdale
There are many tips you can use to avoid credit card debt but unfortunately, they do not always work. When that is the case, our Fort Lauderdale debt defense lawyers at Loan Lawyers can help. We know the strategies that will give you the best chance of a successful outcome and will protect your interests at all times. Call us today at (954) 523-4357 or contact us online to schedule a free consultation.
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Loan Lawyers is made up of experienced consumer rights attorneys who use every available resource to develop comprehensive debt solution strategies. Our goal is to take on those burdens, resolve those problems, and allow our clients to sleep soundly knowing they are on the path to a better future.
