Use credit card a lot? Here are 5 ways to avoid debt traps!
You can anytime seek help, to maintain a good credit score, seeking professional advice can safeguard against credit card pitfalls
New Delhi: Recently, there has been a significant surge in credit card usage across the country. People are increasingly relying on credit cards for everyday transactions, whether it’s purchasing movie tickets, shopping, or traveling. We all know credit cards offer convenience for immediate payments. Although it’s crucial to understand that imprudent usage can lead to falling into a cycle of debt. There are key considerations to bear in mind for credit card users, that provides essential insights.
5 tips to avoid falling into credit card debt trap
Current financial situation
Firstly assess your current financial situation. Obtain your current credit card statement and bank statement. Pay attention to your income sources such as job and investments. Then monitor your expenses. Make a list of all your monthly expenses. Identify areas where you can reduce spending. Make a list of each credit card, record the current balance, interest rate, and minimum payment. Pay the bill according to the interest rate or balance.
Monthly budget
The second strategy is to create a monthly budget. Allocate a portion of the budget to pay off credit card debt and pay bills on time. Outstanding amounts increase by not paying bills on time. Larger the amount, higher the interest.
Minimum Amount Due
Another important point is to avoid paying the minimum amount due. This is the amount that you can pay by your payment due date or earlier, to keep your credit card account maintained. It is a small part of your total outstanding amount, usually around 5%. But this does not mean that you should only pay the minimum amount due. Because if you only pay this amount, you will have to pay interest on the remaining outstanding amount.
Contact credit card company for better deals
You can talk to your credit card company to get a better deal. Especially when your credit history is good. In fact, credit card companies consider customers with good credit history valuable and can offer lower interest rates, extend payment deadlines, or offer hardship programs. Credit card companies offer hardship programs to customers who need financial relief for a short period, such as waiving fees for a few months or reducing interest rates.
Professional advisor
Always seek help from a professional advisor. A certified credit counselor will assess your financial situation and suggest specific strategies to deal with credit card debt. This includes budgeting, negotiating with credit card companies, and setting financial goals. They will also teach you better card management to strengthen your financial health.
By working on these suggestions, you can prevent credit card debt from increasing. This way, you can fully benefit from your credit card without any worries.