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How You Can Avoid Credit Card Debt?

Posted by creditcardsforbadcredit on August 5th, 2020

Credit card debt can be very dangerous. It can affect your mental health also. Most of the people think credit as free money and fell in the debt trap. To help you in avoiding this below are 8 ways given through which you can avoid getting under debt.

With your savings: Before using the credit card you should have some amount equal to the credit limit of your card. For example, if the limit of your card is ,000 then you should have your savings equal to ,000. This way in case you are unable to repay the amount used then savings can help you. If you are not having any savings then try to use a credit card with high cashback. This way with the multiple cashbacks you can manage a huge amount in the long term. This amount can help you in future if there is any debt.

Using 30% Credit: It is said that you should not use more than 30% of the total available credit. Well, this cannot guarantee that you’ll never face debt but chances of getting under debt decrease with this. You can achieve this by only purchasing things you can afford. By building a habit of saving before purchasing, you can minimize your credit card usage. This can also increase your money handling power.

Paying on time: Sticking to your payment schedule can help in avoiding the debt. This is because in most of the cases one small debt becomes the reason of big debts. Missing a small payment won’t put any unnecessary pressure on your mind. This small debt is enough to break your habit of timely payments.

Using a secured credit card: A secured credit card is backed by its security feature. That’s why it is referred to most of the people who are new users or the users who cannot handle debt. Before purchasing a security card you have to pay a collateral amount or deposit amount. This amount is equal to the credit limit of your card. For example, if you want to purchase a credit card of limit ,000 then the collateral amount is ,000. You have to pay this amount because as your credit score is low, it is difficult for banks or companies to trust. This collateral amount can be used by the banks and companies in case you are unable to pay. This way your credit score is saved and you can easily avoid the debt. To choose the best secured credit card you should check out applied bank secured credit card reviews.

Avoiding unnecessary transfers: Balance Transfer credit cards are used by most of the people for transferring the balance to save interest rates. If you are the one who cannot handle the short term debt easily then you should not indulge in such practice. Below is the reason explained.

Balance transfer credit cards are used for transferring the balance to a credit account with a high-interest rate. For example, if you used some credit from your account and you are unable to pay before the due date. Now as the interest rate is high you have to pay a huge fine. In this condition, you can use a balance transfer credit card to transfer the balance. Now one debt is paid but you still to pay for the credit used in balance credit card. The conclusion of the study of similar cases tells that repeatedly transferring balances results in everlasting increasing balance. In other words, you can also say that the same situation results in never-ending debt.

Availing cash from credit cards: Most of the people avail cash from credit cards in case of emergencies. While any emergency, you should handle your desperation as losing your control can put you under debt. Here you should take some time and look for all alternative options available. By considering the debt factor you should take your decision. For example, there can be any other option which can save you from financial trouble. In this, the first option of the blog (with the savings) can help a lot.

Knowing the terms and conditions of credit card: You should carefully read the terms and conditions of your contract. This is because there are a lot of terms involved in the contact. Not knowing about these terms can put you under huge debt. For example, there are multiple interest rates offered by the companies while offering a credit card. Not knowing about these Interest rates can put huge pressure if you like to use credit card a lot.

Why interest rates matter a lot?
Interest rates have the power to change your effective repayments. For example, if you availed credit of ,000 and you are unable to pay before the due date. This is the time when Interest rate comes to the play. If the interest rate is 12% annually then you have to pay ,100 after the first due date. This amount is going to increase until you pay it back. Now many companies offer promotional interest rates (for a short period of time). Suppose the value of promotional Interest rate is 5% for 6 months. Now in the case of late payments 5% interest will be applied and after 6 months 12%. Thus, it becomes important for you to understand these terms and conditions of your card.

Checking out reviews before buying a card: With reviews, you can acquire all the insights of using the credit card you want. For example, if you want to use a surge MasterCard then you should read a review of the surge mastercard.

The main benefit of checking out a review of the green dot primor visa classic secured credit card is that you can read experiences of multiple users. This way you can understand the benefits and problems from multiple perspectives. By reading multiple reviews you can also check the debt risk in using that credit card.

Additionally reading credit cards review comparison can help you in choosing the best card. In just one click you can compare all the key details. For example, you can compare the types of rewards available, types of interest rates applicable etc.

Also See: Credit Card, Interest Rates, Secured Credit, Credit Cards, Pay, Interest, Debt

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