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How to avoid credit card debt and improve your credit score

How to get your credit in good shape
How to get your credit in good shape 04:12

A good credit score could impact your ability to get a new home or car. But credit card debt, with high interest rates, can hold you back.

According to credit bureau Experian, the average American carries more than $6,000 in credit card debt, up 3 percent from 2017.

Avoiding credit card debt

John Vento, a certified public accountant and financial planner, told CBS News the best way to avoid credit card debt is to follow a basic principle -- only buy what you can afford.

"Clearly it's safer than using cash but at the end of the month, if you don't have those funds available to pay for whatever it is you're purchasing, then quite frankly you should not be buying whatever that is," Vento said.

He recommends sticking to no more than two cards. When it comes to retail credit cards, it's tempting to sign up at stores in order to get discounts off your total purchase. But Vento says don't fall for it if you're spending a small amount of money.

"If you're about to refurbish your entire apartment, you're gonna spend $10,000, then it's something you want to think about if you get 25 percent off," Vento said. "But at the end of the month when that bill comes, pay for it and shortly after that, cancel that credit card. Sort of beat them at their own game."

In order to avoid credit card debt, pay off charges in full each month. CBS News

Why are credit scores important?

Vento described credit scores like your "report card." If you have a high credit score, you have a higher probability of getting a lower interest rate if you need to borrow money later on. If you're already stuck with a low credit score, use your card sparingly. Vento also recommends keeping your oldest card the longest, and always pay your bills on time.

Getting out of debt

In order to get out of debt faster, make a larger contribution than the minimum payments due. If any extra income is coming in from a side project or raise, put that money towards paying off your debt.

If you can't make the minimum payments or are behind, consider contacting your creditor. They may help set up a payment plan or temporarily reduce interest rates under a hardship plan so that the balance will be paid down.

If you are far behind on payments, consider talking to a credit counselor. They may help develop a debt management plan or help you decide whether a low interest rate loan to consolidate debt is available.

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