The apparent comfort of owning credit cards can be transformed into a vulgar nightmare when you get ensnared by extortionate interest rates charged on you when you infringe the normal payback period.
To stay safe of any impending peril owing to nonpayment of dues at the designated time, one should exercise due diligence and prudence to plan his expenditure.
Primarily chalk out the credit limit which you can comfortably pay back every month and stick steadfastly to that scale only at any cost by resisting the temptation of spending more.
The monthly statement should be checked intently to unearth any inaccuracies that might have inadvertently crept in or fraudulently imposed on the bill. This way you remain away from falling victim to overcharging.
If you sincerely pay the balance on time every month but are going to fail on a particular month’s payment, the credit card company should be called to enquire about the penalty charges.
That sum of money should be included in your check to avoid the fee from appearing as a balance in the subsequent month’s bill which will do away with the grace period and allow levying of more interest.
If you face problems every month in clearing your bill, consider opting for a debit card to draw directly from your bank’s saving rather than disturbing your future earnings.
Avoiding Credit Cards Debts
Always keep a lookout for warning signs that signal to get slowly into the clutches of the vicious cycle of credit card debt.
These indications include spending more than the earnings quite often, paying off only the minimum required bills on credit cards, skipping payments of particular bills to clear others, using cash advances from one card to settle another card’s debt off, reaching the credit limit on one or more cards, feeling a shiver while going through the bills every month, getting regular calls from creditors regarding pending bills and so on.
Further ominous signs include exceeding consumer debts by 20% of the gross salary after clearing taxes, entire monthly payments of debts exceeding income by 35%, or thinking about filing for bankruptcy.
- If you hold multiple credit cards, settle the debt balance of the ones with peak interest rates.
- Switch to a card with no cryptic terms, affordable interest rates, and low credit card processing fees.
- Homeowners should go for home equity loans, whose rates are considerably lower than credit cards and the interest paid off qualify for tax deductions.
- Learn to compromise on luxuries in life and stay away from impulse buying and unwanted spending by being frugal.
- Opt for debt consolidation which facilitates consolidating your entire debts into one payment and also saves a handsome sum on the interest front.
- Only bare exigencies of life should be defrayed by credit cards. In dire situations, forsake the expensive company of credit cards.
- Only take the services of reliable professional partners to walk out of debts to avoid putting your feet in the trap of unscrupulous money lenders. Debt counselors should be consulted at all times to get assistance on financial problems.
The aforementioned steps will definitely get you out of the dark and cold world of debts of credit cards, following which steps are to be initiated to build a cash cushion to take care of unforeseen financial problems of the future and build a better credit rating.