How to avoid Credit Card Debt

Digitisation has empowered consumers and there are multiple avenues for over indulgence. Today you can own almost anything by click of a button in a matter of few seconds. Availability of easy money gives birth to a false sense of security and people start indulging in unnecessary spending. Credit cards do provide access to easy money and buying power which leaves little scope of slippage else you will fall into the debt trap and getting out of it gets difficult at times. To help you, here are a few precautions with respect to credit card usage which will help avoiding the debt trap.

 


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 1.     Spending beyond your means

Before starting to use your credit card do the math’s regarding your spending and repayment power. A fair calculation will be based on your credit card limit and your monthly salary. It’s never advisable to spend an amount which is greater than your salary as that’s the direct invitation to debt.

2.     Owning multiple credit cards

1+1 is equal to 2 and the same applies to spending through multiple credit cards. Although the individual bills might appear less the overall amount might get too heavy on your pocket. If you follow the first rule above, you will never require multiple credit cards. Having said that, you can opt for an additional card as a back-up, but use it only in case of emergency. You can also use them alternately each month but never together.

3.     Your credit card data is stolen

Credit card data can be stolen in two ways. One the physical card is stolen and second only credit card number and cvv number plus 3D password fall into the wrong hands. Both the cases are equally dangerous and require immediate attention. Keep the customer care number handy and get the card blocked immediately at the first sign of unauthorized usage. 

 

4.     You are not paying your credit in full

The interest rate on credit card debt falls in the range of 36% annually. This is not less by any standards. So not repaying the purchase amount in full is not a wise decision. Many people think that paying less does buy them more time, but once you do the calculations you will be surprised to know that you are paying a hefty price to buy time.

 

5.     You have not bought a protection for your card

The probability of card theft is never zero. Various insurance companies provide risk cover against card loss and you should opt for one if the credit limit is reasonably high for your card. Erasing the cvv number at the back and remembering it can be a good option as in case of loss thieves cannot use it.

 

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