{"id":7760,"date":"2024-11-12T13:30:51","date_gmt":"2024-11-12T13:30:51","guid":{"rendered":"https:\/\/finderica.com\/how-to-go-cashless-while-also-avoiding-credit-card-debt\/"},"modified":"2024-11-12T13:30:51","modified_gmt":"2024-11-12T13:30:51","slug":"how-to-go-cashless-while-also-avoiding-credit-card-debt","status":"publish","type":"post","link":"https:\/\/finderica.com\/?p=7760","title":{"rendered":"How to Go Cashless While Also Avoiding Credit Card Debt"},"content":{"rendered":"
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Consumers broke up with cash during the COVID-19 pandemic, and it doesn\u2019t appear that they\u2019re rushing to reconcile. <\/span><\/p>\n<\/div>\n

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Before the pandemic, Steffen Kaplan, a social media and visual consultant in the New York area, preferred using cash to credit cards. When we spoke in September 2020, he said cash helped him avoid overspending, but the coronavirus changed his spending habits.<\/span><\/p>\n<\/div>\n

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\u201cI don\u2019t carry cash around with me anymore,\u201d Kaplan said at the time. \u201cGiven that we have to remember to wear a mask, not touch anything, and go home and wash our hands every two minutes, it just seems easier to have a credit card rather than be fumbling around with cash,\u201d he added.<\/span><\/p>\n<\/div>\n

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Like Kaplan, more Americans shifted to digital payments amid the pandemic, and the number of consumers making the switch is projected to keep growing. According to the 2024 Global Payments Report by Worldpay, a payments technology company, digital wallets were the most popular method of payment for e-commerce in 2023, followed by credit cards. And for in-store purchases, credit and debit cards were consumers\u2019 top choices. Cash accounted for just 12% of in-store payment methods in 2023, and Worldpay estimates it will drop to 8% in 2027. <\/span><\/p>\n<\/div>\n

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But for some, <\/span>contactless payments<\/span> also come with added overspending risks. \u201cWhen you are used to a cash-based spending system, it\u2019s extremely easy to overspend when you don\u2019t physically \u2018see\u2019 yourself spending the money,\u201d says Eric Simonson, certified financial planner and owner of Abundo Wealth.<\/span><\/p>\n<\/div>\n

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If you\u2019ve made the switch to digital payments, but you also want to make sure to avoid debt, here are some strategies.<\/span><\/p>\n<\/div>\n

Try to pay off your credit card balance each month<\/span><\/h2>\n
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Paying off your credit card balance each month isn\u2019t always possible. In fact, among those who carry a balance, the average for households is around $21,541, as of June 2024, according to <\/span>SS research<\/span>.<\/span><\/p>\n<\/div>\n

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But avoiding such rotating balances is a good goal because credit card debt is so expensive.<\/span><\/p>\n<\/div>\n

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\u201cIt\u2019s important for those making a transition to credit cards to understand the Sisyphean challenge of getting out of credit card debt,\u201d says Sam Boyd, a certified financial planner and founder of Confido Advice & Investments, a financial planning firm, citing the generally high interest rates on credit cards. According to the Federal Reserve, the <\/span>average credit card APR<\/span> among those assessing interest is 23.37% as of August 2024.<\/span><\/p>\n<\/div>\n

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Treat your credit card like a debit card, and try not to charge more than you can afford to fully pay off in one billing cycle. One way to guard against it is to pay off purchases immediately after you make them, rather than waiting until the end of the month and having to pay one lump sum.<\/span><\/p>\n<\/div>\n

Give yourself limits<\/span><\/h2>\n
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Simonson suggests setting a low credit limit on your credit card if you\u2019re worried about overspending. \u201cSet your credit limit for just above what you normally spend each month on groceries,\u201d he advises.<\/span><\/p>\n<\/div>\n

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The downside to doing that is that using more than <\/span>30% of your credit limit<\/span> can hurt your credit score, and it also means you can\u2019t rely on the card in an emergency if you need to purchase more than normal. But the strategy does help keep you from overspending.<\/span><\/p>\n<\/div>\n

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He also notes that many credit card companies offer a service where <\/span>you can be texted<\/span> as you are approaching your credit limit. \u201cIt\u2019s a good idea to turn this on if you are new to using a credit card, to keep track of where you are with your spending throughout the month,\u201d he says.<\/span><\/p>\n<\/div>\n

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Jodie Kelley, CEO of the Electronic Transactions Association, says consumers can also stick with debit cards or prepaid cards, which can be added to <\/span>digital wallets<\/span>. <\/span><\/p>\n<\/div>\n

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Here are a few other ways to set parameters on your credit card spending:<\/span><\/p>\n<\/div>\n

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