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Here are some tips for preventing credit card debt...

Before you start using a credit card, decide what it will be used for. Remember that a credit card limit is not free money. It is a loan that you must repay.

Start slowly with one credit card with a low limit, and use it responsibly. Starting small will help you establish a credit history and keep you from getting into excessive credit card debt. If a credit card company raises your limit, you may request that the limit be lowered.

Read the fine print! Make sure that the card you sign up for is what you think it is. For example, what is the interest rate after the expiration of the introductory rate? Does the card have a grace period and an annual fee? When will fees be charged, and how much? Which balance computation method is used. (Average Daily Balance Method is most common; Adjusted Balance Method is usually the most advantageous for card holders). Shop around for the card least likely to cause you any problems with credit card debt.

Always pay on time. Mail your check at least a week in advance of the due date to avoid adding finance charges to any existing credit card debt that you may already have.

Try to pay off your total balance each month. Credit cards are an excellent convenience tool; however, they can be extremely costly if a balance is carried. If you always pay off your balance, you will not get into serious credit card debt.

If you already have significant credit card debt that you cannot payoff immediately, pay more than the minimum payment. If you only pay the minimum, your debt will take years to repay. If you have multiple cards, pay off cards with the highest interest rates first.

Avoid having multiple credit cards including retail cards. A few cards are fine, and they will help you establish a credit history. However, too many open credit lines, even if they have zero balances, would be considered a negative mark on your credit report. Lenders do not like it when you have the ability to quickly incur significant credit card debt. Some experts recommend that total credit lines be limited to no more than 20% of your annual income. Resist the urge to acquire that "free t-shirt" by opening another credit card.

Make sure that you cancel unnecessary/unused credit cards. Do not just cut them up. Credit cards will show as open lines of credit on your credit report until you cancel them (definitely not a good thing if your credit report has suffered to due credit card debt). Tell the creditor to reflect "account closed by consumer" on the credit report.


If for some reason, you will be late with your payment, call the issuer and let them know--ahead of time if possible. The issuer may be willing to make alternate payment arrangements that won't leave a mark on your credit report, particularly if you have a good payment history. It is also a good idea to be aware of your due dates so that you can plan your payments and avoid credit card debt.

Keep in touch: If you change your name or address, notify your lending institution immediately. Your payment could turn into a late payment (and increased credit card debt!) in the time it takes for a statement to be forwarded to your new address.

Keep copies of sales slips and compare charges when bills arrive. Examine your bill, including changes in terms, which may be slipped in with your monthly statement. Interest rates and fees may be changed with only 15 days advance notice.

If you have a billing error, put it in writing! A telephone call will not protect your rights. If you find mistaken credit card debt on your bill, you can dispute the charge and withhold payment on that amount while the charge is being investigated. The error might be a charge for the wrong amount, for something you didn't purchase, or for an item that was not delivered as agreed.

Remember that interest rates can be negotiated with the credit card issuer. If you feel that your interest rate is too high, it does not hurt to ask the company to lower the interest rate.

Do not let a friend use your credit card. If your friend is unable to pay the bill, you will be responsible for any credit card debt that arises.

Create a budget. One useful tool that may be used in conjunction with a budget is a credit card recorder in which you document your credit purchases. By using a credit card recorder, your monthly credit card debt will not be a surprise. If you have difficulty staying within your household budget, consider paying by cash, check, or debit card, instead of using a credit card.

Go to the Credit Card Debt Elimination Center for news and articles on reducing your credit card debt.