Credit Cards have a way of turning into a nuisance well before you realise it. If you are overspending on your Credit Cards, stop right there and give this article a read.
A thin line separates our needs from wants, and more often than not, we tend to overstep it. Take, for instance, the tryst with our beloved Credit Cards. While signing up, we were convinced that we are in control. We thought that we could tie our wishes to a mast and set them free in the howling wind. But then, we made the first swipe. Then the second, the third, the fourth. And, while we were at it, our little exploits snowballed into a foot-long Credit Card bill.
Credit Card Debts Are Real
According to an RBI report, the overall outstanding amount on Credit Cards was Rs. 42,100 crore in 2016 as opposed to Rs. 27,000 crore in 2008. Debts are rising and so is the number of Credit Card users every year. In a report published by Medianama.com, it stated that India had 37.48 million Credit Card users on March 2018.
Additional Reading: Are You An Irresponsible Credit Card User?
If you are just starting out with your Credit Card, take heed and make amends while you still can! Here are a couple of things to help you stay grounded:
‘Minimum Amount Due’ Is A Trap
Ever noticed the tiny amount scribbled over your Credit Card statement? That’s the first thing you need to avoid. If you pay just the minimum amount, you will be required to pay interest on the remaining amount. As you may already know by now, interest rates on Credit Cards are quite high and it’s in your best interest to avoid them.
Additional Reading: 5 Good Credit Card Habits To Acquire In The New Year
Watch Your Credit Limit
Try to opt for a Credit Card with a lesser credit limit. That way, you have a default check on your spending. Also, avoid reaching the maximum limit on your Credit Card. Although there is no thumb rule, most experts believe that it’s safe to use up to 50% of the sanctioned limit on your Credit Card.
Steer Clear Of Cash Withdrawals
Cash withdrawals on Credit Cards are known as cash advances. Borrowing cash on Credit Cards come with a very high fee, and therefore, you should try to avoid it as long as you can.
Use The Rewards To Your Advantage
Not every Credit Card user takes full advantage of the rewards they receive on their Credit Cards. Watch out for the rewards summary (you’ll find it on your Credit Card statement). You can redeem these reward points to get further discounts on your purchases.
If you are the type who forgets to make the payments on time, the ‘auto-debit’ feature on your Credit Card can help you out. With this feature, you can sit back and relax while your bank automatically deducts the pending payments from your account.
Additional Reading: Be Wise And Prevent Credit Card Fraud With These Tips
Don’t Give In To Impulses
Impulsive shopping is a major reason why there are so many cases of Credit Card debts. If you need to make a big-ticket purchase, plan it well beforehand. Set aside a sum every month towards that goal. In fact, you can readily invest in a Mutual Fund in the form of SIP and realise your goal in a matter of months.
Be Aware Of Your Financial Goals
Think about where you want to be in the next 5 years. Will you be able to get there if you have a huge Credit Card debt to pay off? If you are passionate about your financial goals, you will find in yourself the need to nurture them and, hence, you will inevitably cut down on spending.
Avoid Using Multiple Cards
Most people who use multiple Credit Cards do it because the credit limit on one card is not sufficient to support their spending habits. While multiple Credit Cards increase the available credit limit, they also create an illusion of having more money and, thus, the ‘necessity’ to spend. If you can, stick to just one card and work on increasing your credit limit gradually.
It’s fun having a Credit Card watch your back while you are out partying. Drop in the occasional reminder to yourself to keep the spending in check and you will do great!
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