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Credit Cards or the plastic money of today’s time is a boon to mankind. Simply a few of them in your pocket can give you a feeling of instant richness. But on the other hand, if not used wisely, they can also turn out to be a curse. The incessant debt mount has a tradition of multiplying exponentially at a tremendous rate. Those who have been in such waters know the feeling well!
So how to be Credit Card wise or how to use credit cards smartly so that the debt may not give us sleepless nights and haunting days. Below-given are some of the tried and tested techniques to get rid of the credit card debt faster than you have planned. Check out whether you are following these techniques or not yet:
1. Transfer your balance from one card to another
Yes, you read that right! Here’s the full trick. Transfer all your dues from one card to another or from multiple cards to a single card which is still in the credit-free period of 90 days. Though this is not a permanent solution, it can give you a space to breathe and strategize your future payments. The trick plays psychologically too, as it gives you a feeling of having due payments only on one card.
Once the credit-free period on this second card will end, the regular interest will be levied on the card-holder.
2. Clear off debts with the highest interest rate first
Unlike what you have been doing till date i.e. paying the dues of a card which has the closest due date; you should follow this recommendation. Clear off the debts of those cards first which are charging higher interest rates. This way you can reduce the total interest going out of your pocket and hence reducing your debt burden.
This technique will definitely need you to manage your due dates well else it will be difficult to follow. Also, the technique has a long-term effect.
3. Pay more than the minimum due amount of a card
Again, this is a trick which will affect your long-term outstanding. Credit cards usually have very high-interest rate and if only the minimum amount is paid, the debt will become a never-ending trail. Though most of the card holders prefer paying only the minimum amount to save themselves from the mounting debt but if noticed carefully it never reduces the size of the mount and even if it does, then the exponentially increasing interest rate increases it further. Thus the vicious chain never ends. Hence it is advised that one should prefer paying more than the minimum amount on a card.
4. Talk to your bank or credit card provider
This is important! If you are in a financial crisis due to any situation, talking to your bank or Credit Card company will surely help. You can tell them your problem and if you are a genuine paymaster they would definitely hear you. Also, it is highly likely that they may relax their recovery of interest giving you some relief.
5. Ask your bank to convert outstanding to EMIs
When you talk to your bank to give you a relaxation on interest, you should also ask them to convert your outstanding to monthly EMIs. Though the entire debt will take some time to get off your shoulder this will undoubtedly help you to plan all your monthly spending better while clearing off the card debt side by side.
However, do remember not to ask your bank to settle your dues at any condition. This seems to be a luring option when faced with a mounting debt but in a long-term, it affects your credit eligibility and credit rating too. As an outcome, next time when you approach a bank for a loan or card, they might refuse you seeing your low credit scores.
6. Spend money wisely
No advice is bigger than this! Having a credit card in hand makes one spendthrift because the comfort of buy-now-pay-later seems the most relaxing thing on Earth thus making you spend more than required. Hence, when you have a lot of outstanding on the cards, it is advised that you should prefer spending in cash. This way you’ll think twice before spending for unnecessary things.
7. Take advantage of the interest-free period on your card
This can only work if you manage your cards’ bill cycle well. Making a purchase just a day or two before the due date will only give you this much of interest-free window. While if you allow your due date to pass then on the newer bill cycle, you can avail 50 or more days of the interest-free period. Isn’t it a wonderful idea to save oneself almost two months of interest-free purchases?
8. Change the habits causing debt
Again an important point to ponder! Instead of dealing with an exponentially mounting debt later, it is wise to not let it grow at the initial stages. Check what is causing you to use your credit card more than often. Usually, it is the impulsive purchase of clothes and accessories for our self or our loved ones that cause the debt. If this is the reason, prefer going with cash so that it may make you think twice before purchasing.
9. Prefer taking a loan than paying off credit card overdue
The overdue interest on a credit card debt is charged at around 36 to 40% while the same would be 10 to 15% less on an unsecured personal loan and this would be less by 20 to 25% if you take a secured loan like a home top up or loan against an LIC policy. So, what is better? Guess, the answer is clear by itself!
10. Learn to live within your means
A mistake once made should not be repeated. It is important that once you get rid of all your credit card debt and breathe a sigh of relief, monitor your spending behavior ever after. Do not fall again into the trap of financial binging and spend wisely within your limits. This will never let any debt to mount over.
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