Is a dark cloud of Credit Card debt looming over your head? Here’s how you can get rid of it in the quickest and smartest way possible.
Credit has its karmic ways of catching up with you, but as with karma, if you practise good ethics, you’ll reap the benefits of your actions. At the end of the day, it’s all about how you use credit that dictates whether you’re cut out for Credit Cards or not.
If you’re someone who took a Credit Card (or multiple cards) a couple of years ago, got a little carried away and now have a looming cloud of debt over your head, you’re not alone. However, you might want to start dealing with the issue before it gets out of hand.
Here are some steps that will help turn your credit habits onto the right path. Read on!
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Prioritise Your Debts
The thumb rule when it comes to debt is to get rid of the primary source of your debt – in this case, the Credit Card that has the highest outstanding balance and of course rate of interest. If you own multiple cards, this is how you should sequence your debt clearance plan. Address the elephant in the room first; you can get to the smaller beasts eventually.
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Consolidate Your Debts
Another popular way of dealing with Credit Card debt is to consolidate it all and pay it off with a Personal Loan. Now, keep in mind that this only works if your Credit Card debt is a huge amount that you can’t seem to pay off right away. Otherwise, nothing beats just clearing your Credit Card balance in one go.
Additional Reading: Tips To Avoid Credit Card Debt
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Pay More Than Your Minimum Due
While the automated minimum due payment system for Credit Cards is convenient and hassle-free, it gathers a lot of debt and high interest over time, meaning your debt never really reduces. Instead, try and pay as much as you possibly can so that your outstanding amount reduces, thereby gradually improving your debt situation.
Additional Reading: How To Choose The Best Credit Card For You
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Get Your Credit Report
If you need insights into credit card limits, outstanding amounts, payment history and your credit portfolio, you can now get it for FREE and in less than 3 minutes. Check your latest Experian Credit Score and go through your detailed report. This will give you a clear picture of your debt situation, so you can quickly plan your way out of debt.
Another advantage of checking your Credit Score is that it incentivises you to improve your credit management skills. A number can serve as a target you can focus on.
Additional Reading: Why You Should Read Your Credit Report
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Don’t Use Your Credit Cards For A While
While this may sound like a no-brainer, you’ll be surprised how many people abuse their credit limits to such an extent that they end up digging themselves into a bigger debt hole. If you’re in a situation where your debts are considerably large, the smart thing to do is to park your credit purchases for now and focus on paying your Credit Card bills. If you continue to swipe your card like there’s no tomorrow, your outstanding amount will never get smaller.
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Get a 0% APR Credit Card
Another option to deal with your existing debt is to transfer your balance to a new Credit Card and save on interest until the end of the 0% APR period. Your target should be to clear a decent amount of your debt by the time the grace period ends.
Additional Reading: Top 6 Balance Transfer Credit Cards in India
Remember that Credit Cards are powerful financial tools that can reward you with various perks, benefits, discounts and privileges, provided you treat it right. As with anything else, practise a good bill paying habit and there’s no way you’ll be in a bad debt situation again!