Saturday, December 19, 2009

How to avoid Credit Card debt

Credit Cards(CC) is really useful as you can buy things on credit. Book a flight ticket without moving an inch out of your house ,buy your favorite items even if you don’t have the much needed cash just buy what ever you with your CC. Isn’t that great!!. But if you don’t know how to manage your CCs properly you might fall into trouble called CC debts.
General advice to avoid CC debt

Always try to pay more than your minimum dues: You actually build up recurring and extra interest on your CC when you make only the min payments. It actually shoots up the net cost of your CCs considerably. Therefore, always make an extra payment towards your CC debts whenever you can. Follow this golden rule religiously just pay before the due date: Don’t make a habit of paying CC bills on the due date. You’ll be charged late fees if you somehow miss the due date of your CC payments. Therefore, it is always recommended to make the required payments on time .Good old cash! Try to purchase items with cash: You can avert accumulating CC debt if you make a habit of purchasing stuff with cash. Use CCs only during emergency time when you really cannot do without it. Make a smart budget plan and allot fixed amounts to each category so that you don’t require to use your CC unless it’s an urgency, such as, paying those emergency medical bills.Never use multiple CCs: never use too many if possible, cancel some of your CCs. It will help you to manage and remember the due dates of your payments if you have few manageable number of CCs. Also always create an emergency fund so that you don’t have to swipe your CCs every time. It will help you to prevent cumulatively accumulating CC debt. It is recommended that you keep an emergency fund worth 3-6 months of your living expenses. Also, make sure you don’t use the amount to buy stuff. Instead, use the money to repair a damaged item or pay an emergency medical bill whenever required.

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