With the attractive feature of “sign-now-pay-later,” credit card are one of the most common means of getting into debts. Most of the people who hold credit cards have dues on them with a good amount of interest on the same. If not checked on time, this keeps piling up, and people land into a pool of debts.
If you are one amongst them who are facing this issue, then follow these simple steps to get out of credit card debts:
Step 1 – Write it down:
If you hold a number of cards, then use the traditional pen and paper method to jot down important points against each card. Make a list of the number of cards you hold, the interest rate on each, due date, minimum payment, etc. This will help you keep a track of all your credit transactions.
Step 2 – Clear small balances first:
People normally wish to clear huge balances first, buy start with the small ones. This will reduce your tension to a certain extent, and the psychological satisfaction of clearing one balance will boost your moral to take this challenge once again.
Step 3 – Consolidate to 0% cards first:
Always keep a track of card promotions and marketing deals that the credit card companies offer. Look for options like 0% transfer fees on annual charges. If you are lucky enough to grab one, then consolidate your remaining balance in order to avoid annual fees. Avoid cards with transfer fees because they add up to negate the advantages of having 0% annual fees.
Step 4 – Know your financial habits:
Often people land into credit card debts because they overspend than what is their capacity. Lear to separate your discretionary and fixed expenses so that you can better understand your expenses. If you are one of those who has no control over expenses, then better switch to debit cards because this will make you realise on an immediate basis that the balance forms your account is getting deducted.
Step 5 – Plan to start an emergency fund:
People who are used to credit cards spend more than their limit and hence lack cash with needed the most. In such case, switch to the habit of creating an emergency fund. This will help you create a buffer that can help you in times of dire need of money. So, make you mind to set a small amount each month for this fund. Start saving today!