Credit cards are all about the ease of use and have become an essential part of our lives. Usually, you lose control on spending as you keep swiping the credit card. You struggle with the credit card dues, and fall behind in repayments. Banks punish you for late payment of credit card dues and charge high interest and penalties. You default on the credit card and your CIBIL score is affected.
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1. Stop using the credit card:
Don’t just reduce spending with the credit card. Bring spending to a complete halt. Keep your credit card in a sealed envelope hidden in a place, which is really difficult to find. Then start spending in cash. This will curb all impulsive purchases.
2. Convert all payments to EMIs:
If you find it difficult to repay credit card dues, talk to your bank and get the outstanding amounts converted to EMIs. Do remember there could be a processing fee of 1-2% of the outstanding amount on the credit card.
If you have lost your job and are struggling with repayments, talk to the bank/card company. Otherwise, interest charges and penalties will keep on rising and you will really struggle with the repayments. The Bank could give you temporary relief (relax their recovery of interest), owing to your tough situation.
4. Don’t pay just the minimum balance
You need to pay much more than the minimum balance on the credit card. If you pay just the minimum balance, debts keep rising. Credit cards charge a high interest on the outstanding balance. You will struggle with the repayments and eventually turn out to be a defaulter. Your CIBIL score will be badly affected.
5. Opt for the automatic payment facility
If you don’t repay the borrowed amounts in time, credit cards charge interest of 2-3% a month. Then there are the late payment fees. This is why you must opt for the automatic payment facility. The money gets deducted from your bank account without any manual intervention and the repayments are made in time. You don’t have to worry about those deadlines, even if you are travelling, or far away from your bank.
6. Limit the number of credit cards
Banks keep offering you credit cards and you must make a conscious effort to limit the number of credit cards you have. Don’t bother about the numerous emails banks send you, literally pleading with you to avail credit cards. Opting for multiple credit cards forces you into the debt trap. The buy-now-pay-later lure of the credit cards is irresistible.
You are tempted to buy items/things you don’t really need and struggle with repayments. Be Wise, Get Rich.
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