Avoiding Debt Through Proper Credit Card Use

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Asset Recovery Associates
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Asset Recovery Associates, Inc. is a national collection agency that works with both consumer and accounts receivable management clients. Individuals can visit www.ara-inc.us or contact an Asset Recovery Associates (ARA) professional in order to discuss a specific debt situation.

No individual or family plans on falling into debt. Most start their adult lives with ideas of consistent and gainful employment, financial arrangements for retirement, and the timely payment of any outstanding loans. Unfortunately, pay rates and employment can change, as can a wide variety of life events. With this in mind, there are a few basic steps a person can take in order to avoid falling into significant debt.

Credit card mismanagement is one of the more common ways an individual might find themselves in debt. Arguably the most basic step toward avoiding credit card debt, or any form of debt for that matter, is simply to never charge an amount that you cannot afford. Credit cards should be viewed merely as an item of convenience, rather than an endless series of small loans. If there will not be enough cash to pay for a product or service at the end of the month, the credit card should not be used as a stand-in.

A more specific method for avoiding debt involves categorizing expenditures. Disposable items such as takeout or groceries, for example, should never be charged to a credit card. Unpaid credit items quickly generate interest and individuals should never pay monthly interest for a dinner consumed several weeks earlier.

Indeed, the interest rate of each individual credit card should be carefully examined, particularly when it comes to cash advances. These advances generally carry an exceptionally high interest rate, in addition to transaction fees and the lack of a grace period on repayment. Even timely repayments on cash advances come with built in charges that must be paid at the end of the month.