It’s Time To Lower Your Credit Card Debt Fast
A credit card can be both a curse and a blessing in today’s times. A blessing because it empowers you with anytime anywhere purchasing power; a curse because you may end up over spending and hence accumulate some huge credit card debt. But you won’t do that right? You’re on CreditSmart! There are main two problems that arise with not paying your credit card on time –
- Credit card companies charge heavy interest when you don’t pay your credit card debt on time. Even if you have availed Balance Transfer interest feature, the nominal rate if interest is application only for first 6 months. After that period, a high rate of interest is applicable on all your pending payments related to that credit card.
- A second negative effect of not paying your credit card on time is you will end up reducing your CIBIL score, which you definitely don’t want to happen. CIBIL score is a score that reflects your creditworthiness and may play an important role when it comes to loan sanctioning because most of the banks consider CIBIL score before approving your loan application. It’s much easier to maintain a good CIBIL score than repair a bad one.
5 Easy Steps
So the ultimate wisdom lies in keeping your credit card debts minimal and paying something on them regularly. Let us share some ways of reducing your credit card debt –
- Analyse your credit card statements – Make sure to go through your credit card statement every month and observe what kind of expenses reflect over-spending. It would be better if you do away with such expenses.
- Go for EMIs – Certain kind of expenses like buying household assets or lifestyle shopping can be converted into interest-free EMIs. You may opt for this benefit, hence your burden of credit card debt for the month will come down.
- Create a monthly budget – The best way to keep your credit card bills low is to set a limit for yourself. Even if your credit card allows you Rs 1 lakh limit, you should try not to exceed Rs 50000/- unless until it is an emergency or your are going ahead with a capital expenditure. Low spending through credit card will automatically result in lower credit card debt.
- Use additional money to clear your previous debts – If you owe a significant amount of money on your credit card bills, make sure to use all additional incomes to clear off this debt. The more you clear your previous credit card debts, better will be your CIBIL score.
- Prioritize your credit cards – Most of us have multiple credit cards. With all these cards, the irony is we are not even aware of which credit card is suitable for which kind of expense! Be aware of the various benefits associated with these cards to ensure you get maximum cashback or rewards. Also, make it a point to pay the card with higher rate of interest very first.
You can also opt for a new credit card with Balance Transfer option if your previous dues are weighing on your mind. But balance transfer would also be a temporary solution; the permanent solution lies in managing your revenues and expenses in tandem.