Rewards and offers are often cited as the credit card benefits to be availed of while opting for a credit card. While you must certainly find out about the rewards offered by a credit card, the most important criterion that must be checked is the credit card’s interest rate. In this article, we shall take you through a list of 8 effective tips to help you avoid credit card debt. Keep these tips in mind to avoid falling into a credit card debt trap.
- Set a reminder for the bill generation date
After applying for a credit card online, or through a bank, you must find a way to remind yourself about the credit card’s bill generation date. This could be as simple as setting a reminder on your phone. Being aware of your credit card’s bill generation date helps you mentally plan for its repayment in advance, hence helping you stay aware of the last date of payment. Credit cards’ repayment cycles, called “billing cycles”, have “due dates” – the dates by which you must repay your credit card dues.
- Consider debt consolidation
A very effective way of evading a credit card debt trap is to opt for debt consolidation. A popular credit card benefit is the ability to avail of a low-cost personal loan to pay your pending credit card debts. Debt consolidation is the procedure of combining all of your debts into one. Debt consolidation can help you choose a low credit card interest rate and lower EMIs (Equated Monthly Instalments).
- Avoid assuming more debt
A downside of obtaining credit cards for free is that one often feels tempted to take on more debt despite having high credit card debt. You must resist and check your spending habits if you have a high credit card debt.
- Pay off the costlier loans first
A systematic approach to clearing your credit card debt would be to prioritize your debts by their expense. As a part of consolidating your credit card debt, you must first try to pay off the costlier loans first. Proceed from the most-to-least expensive debt on your list and pay them off one after another.
- Plan your repayment
Often, after applying for a credit card online, we do not tend to think about its repayment immediately. However, this habit, if cultivated, can go a long way in helping you avoid a stressful credit card debt trap in the future. Planning for your credit card repayment should accompany – and in the best-case scenario, precede – your regular expenses using the credit card.
- Figure out ways to earn more
It always helps to have more money in hand. If you have a high credit card interest rate, you must look for ways to make extra money. If you wish to start building a side income, you can opt for IDFC FIRST Bank’s MyFIRST Partner program.
- Clear your credit card debt
Your first priority after opting for a debt consolidation must be to clear your credit card debt, especially when the credit card interest rate is high. If you are unable to pay your credit card debt on time for some reason, you may end up incurring higher interest rates and penalties. Eventually being pushed into a deeper credit card debt trap.
- Opt for a balance transfer
Even while applying for a credit card online, you must always have a second and third option in mind – to be aware of the credit card interest rates offered by various banks. This can help you opt for a balance transfer and help you transfer your outstanding credit card debt to a lender with a lower credit card interest rate.
You must exercise caution both while choosing a credit card and while using it to stay away from an increasing credit card debt.