10 ways to avoid creeping credit card debt

Over the past decades, U.S. revolving household debt – debt from sources such as credit cards – has gone up and up. Through the 1960s, revolving debt was so unusual that the government did not track it. In 1968, the first year it was tracked, revolving household debt for all U.S. households was $1.3 billion. Today, it's almost $800 billion, and the average household that carries revolving debt owes about $15,000.

The good news? The total U.S. revolving household debt is actually down 17 percent from the all-time high of $973 trillion in fall 2008, just before the Great Recession started.

Yet a new danger arises as people get out of debt. Some people find they have worked hard to get out of debt – or dramatically lower it – only to find themselves back in debt a few years later. How does debt sneak back up on people, and what can you do to keep it at bay? Here are some suggestions to stay out of debt once you get there:

1 Budget, budget, budget. Calculate what comes in and what goes out of your budget. Then find a way to live within your means, without plastic. Some people succeed by breaking their monthly income into weekly increments. That way, if you overspend one week, you have the next week to recover. Others switch to cash only. Removing credit cards from your wallet (and from near your computer) can help make it impossible to overspend on credit.

2 Don't use rewards as an excuse to go into debt. A study last year by the Federal Reserve Bank of Chicago found that when people sign up for a credit card that offers rewards, their spending and their debt increase. In fact, their debt usually goes up faster than their spending. The reason? Their payments don't go up, even when they spend more. The solution: Do not let rewards motivate you to charge more credit card debt. If you do not pay off the debt each month, the interest you pay will likely cost more than what you earn in rewards – potentially a lot more.

3 Borrowing money isn't getting out of debt. What is debt? Borrowed money, of course. But some people think a good way to get out of debt is to borrow more. For instance, they might take out a personal loan or a home equity loan to pay off credit card bills. The problem? All too often, they start charging to their credit cards again, while also having to pay off the old debt.