Debts are helpful but they never carry a good impression in the minds of the people. It is evident that if credit cards are used unwisely and without control, they can mount heaps of debt on the card holder. Hence, this article highlights some of the major tips on how to avoid credit card debts or, at least, minimize them:
- Credit cards should not be used as loans this is important because a credit card can be used for two main purposes. If one can carry a balance, it can act like a very high-interest loan. If one makes only minimal payments i.e. around 2-3% of the balance each month, he/she would be paying debts for years and years to come including a huge sum of interest. On the other hand, if the same person pays off the balance each month, in that case, the credit card becomes a convenient thing to purchase services and items without having to carry much cash. Thus, it should be used as a cash substitute and not as a high-interest loan.
- Buy only affordable goods there are many items in the world and they are targeted for specific customers. Every person has a personal income and should spend according to that. A credit card should not be used to finance an unaffordable lifestyle. If the balance cannot be paid off every month, then that indicates overspending.
- Fix a budget Budget is something which has no limits. It has to be limited by the person to person. Thus, it is essential to create a particular budget before spending and that should be income-friendly i.e. it should not hurt the pockets at all. Buying things in the comfort zone would fetch more happiness and satisfaction that buying things on debt and bearing tension for the coming months.
- Do not sign up for any Special Services All the banks and credit card issuers attach the cardholders with various plans and services like lower interest rates, credit card fraud protection plans, travel clubs, life insurances and much more. Such services are always overpriced and provide something which the customer hardly needs. Thus, it is suggested that one must shred such ads and offers without even reading them.
- Keep Good Records all the credit cards receipts and documents should be reconciled with the statements received each month. Statements should be reviewed every time one is received. Awareness would ensure knowledge about the expenditures and expenses. It would also help in detecting mistakes of fraudulent charges. To limit the liability, one must deal with such cases immediately and as soon as possible.
Thus, a credit card delivers power along with the responsibility to the holder and it should be used under total control and only for need. Lending money can be good at times, but staying under debts always is not a very good practice.
The 5 tips mentioned above should serve good help to those who are not able to control their credit card debts. If you want to learn more detail please visit Noble Funding Australia