Credit card debts
haunts a lot of people and especially during times of recession things have
taken a worse turn for people who are suffering from such debts. Regular payments
is considered as the key for staying out of credit card debt, but many of us
are unable to follow this golden rule due to temptation and lack of proper
financial planning. It has been seen that credit card companies can increase
the interest rate by around thirty percent, if a consumer fails to make payments
within the stipulated time frame. Credit card debt would have an invariable
effect on one’s credit rating which can cause several grave financial problems.
Here is a list of ways through which you can steer clear of debts resulting through
credit cards.
Emergency
fund
A lot of people succumb
to credit card debt due to the lack of proper emergency fund. In times of
financial crisis people find it easier to use credit card to meet their
immediate needs, but in a way it creates excessive amount of debt. People with an
emergency fund can utilize at crucial times without depending on credit cards.
Affordability
Credit card debts often
develop when a person ends up spending more than he can afford with his actual
income. Credit cards needs to be used only when you are sure that you will be
able to make the payments on time with your current level of income. When
timely credit card payments are made then one does not have to worry about
debts and they can simply enjoy the benefits of credit cards.
Stay
away from balance transfers
Credit card companies
charge a lot of fees for transferring balance from one credit card to another.
Balance transfers should only be done when a particular credit card provides a
lower rate of interest for payments. In many cases people fall prey to credit
card debt due to excessive balance transfers.
Timely
payments
One of the simplest
ways of staying out from credit card debts is to make payments on time so that
late charges do not get levied. Another reason due to which timely payments
help is because credit card companies can alter interest rates for irregular
payments.
Payment
of full balance
One should try to pay
the complete balance every month in order to avoid credit card debt hassles. Rollover
balances can wreck havoc on your finances as gradually the unpaid balances can
snowball into huge credit card debts.
Know
the warning signs
Credit card debt often
develops when people do not notice the signs that imply the impending doom. When
one fails to make credit card payments consistently, then he should take a lot
at his finances and the total debt. It is important to address the problems
related to your finances, so that proper steps can be taken before you get
perched on the mountain of credit card debt.
Evade
cash advances
Usage of cash advances
is considered as the worst form credit card utilization. When one starts to
avail cash advances through credit cards then it means that your finances have gone
awry. Utilization of cash advances is one signs of credit card debt.
Comprehend
terms of credit card
Understanding all the
terms and conditions of your credit card is necessary so that you have accurate
information for interest rates and its subsequent application. One should also
know about instances when the credit card companies can increase the rate of
interest. Credit card debts can be avoided to a large extent when customers are
aware of the aspects which can increase their pending credit card balances.
Avoid
too many cards
It is always
recommended that people should not have too many credit cards as they will have
to pay more to keep up with the pending balances. More credit cards also means
that total amount of credit limit becomes quite high. With high credit limits,
people are often end up making purchases equivalent to the credit limit.
Repaying debts arising out of several credit cards could be quite taxing and
would cause a lot of financial strain on your life. Hence it is imperative to
just have one or two number of credit cards, so that you can strike a balance
with your income and expenditure.
