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Avoid credit card debt


Credit cards can be an effective source of finance, provided they are managed correctly. As with any form of external funding, there are pros and cons to getting a card, and it is important to be aware of the factors of each, prior to choosing the most appropriate source for you. It can be very easy to fall into a credit card trap if you are not careful; this guide provides some of the ways to avoid this.

Beware of interest rate changes

If a card offers you a low rate of interest, to entice you into signing up for one of their cards, beware of the agreement conditions and find out when the interest rate is scheduled to change. Some cards offer 0% rates of interest, however this will be likely to change at some point! Be wary of such deals and remember that it is, ultimately, in the interest of the credit card company to make money from you.

Minimum payments

In order to avoid extra charges, make sure that you are aware of the minimum payment amounts on your credit card account, and when they are due to be paid. Failure to do so, could result in you receiving additional fees and interest charges. In addition, it is worth bearing in mind how your credit rating is affected; if future lenders see that you make re-payments late then they will view you as a high-risk option and are therefore less likely to offer you credit (or will do so at higher interest rates).

Resist the temptation to over-spend

Having access to a card which offers you a generous credit limit can make it extremely tempting to spend more than you need. In times of high spending (e.g. Christmas), ensure that you are aware of how much you are spending so that you do not default on any of the repayments. It is always worth remembering that the money you are spending on your credit card is money that you have to pay back eventually; if you cannot afford to pay it back then don’t spend it!

Don’t use abroad

Using a credit card abroad (often by mistake!) can be a very expensive spending method. Card companies sometimes charge ‘foreign loading fees’ in addition to extra charges for using your card abroad. When you are unfamiliar with a foreign currency, it is not a good idea to pay for items on your credit card or use it to withdraw cash, try and stick to your standard debit card to do this.

Cancel old accounts

When you apply for credit, potential lenders will consider your ability to repay loans in accordance with your commitments to other providers. If you have numerous old credit cards and accounts, you will be viewed as a higher-risk option than if you only have one or two, as it is possible that you will spend money across a range of savings accounts and therefore incur more liabilities. Cancel old un-used accounts to eliminate this problem and improve your credit rating.   

Beware of fraud

Although most providers cover you in the event of fraud, it is still possible for you to be stung by credit card fraud. Be careful who you provide your credit card details too, and where you choose to withdraw cash. Theft of your card details does not only leave you financially short, but it is also linked with identity theft. Fraud can be prevented, not just by using your card carefully, but also by shredding receipts for transactions that you have made (some receipts show your card number which can be disastrous in the wrong hands). It is also advisable to check your credit card statements on a regular basis, so that you can check the transactions linked to your account are valid (and so that you can regularly check what your balance is).    

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Manage your card

If managed correctly, your credit card can provide you with a good option of funding – especially in comparison with alternatives such as payday loans .


Credit rating

When you clear your credit card commitments and pay off what you owe, your credit rating improves, providing you with improved credit options in the future.


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