Credit card debt trap: Credit Card is a very convenient financial tool. But, if it is not used wisely, it can spoil your financial situation. People often inadvertently get caught in such expenses that they do not even need.
The result is- increasing interest, outstanding and stress. But with some easy measures, you can protect yourself from getting caught in this trap. Let’s know 6 smart ways to avoid credit card debt.
1. Always repaid the entire outstanding time
You get relief from only minimum due to credit card every month, but it does not eliminate the real debt. On the contrary, heavy interest is added to the outstanding amount, making your liability gradually and serious. So always try to pay the full arrears every month, so that you do not have to pay interest.
2. Decide your spending limit yourself
Banks give you credit limit of millions, but this does not mean that you have to use it completely. Keeping in mind your monthly income, needs and savings goals, set the limit of spending yourself. Spending without budget can spoil your financial plan and you may have to regret it later.
3. Use Auto Debit Facility
Many times people forget to pay cards due to negligence or busyness, which costs late fees and interest. To avoid this, set the credit card to the auto debit from your bank account. With this, payment will be made automatically on the fixed date every month and your CIBIL score will also be better.
4. Do not keep many cards together
If you have many credit cards, it can be difficult for you to manage transactions, bill bicycle and dew date. This not only weakens the control on expenditure, but also increases the risk of missing payment. So it is better to keep one or two cards and use them sensibly.
5. Avoid cash advance
Credit cards seem easy to withdraw cash from ATM, but this feature is more expensive. It has neither interest-free period nor low interest rate. As soon as you withdraw the cash, immediately heavy interest starts. Therefore, use this facility only in the emergency and repay it as soon as possible.
6. Do not increase expenses in rewards
Credit card companies offer different types of offers and rewards, which look attractive. But if you only increase expenses in the greed of points or cashback, it can be harmful. Remember that 100% money has to be spent to get 2% cashback. Spend wisely, only then these rewards prove beneficial.
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