Simple Steps for Avoiding or Eliminating Your Credit Card Debt

Credit cards are one of the financial tools available to people and it is relatively simpler. It helps with their purchase of goods with great rewards or cash back, thus both beneficial and rewarding. For most people, it is their first brush with the concept of credit.

A credit card when used optimally provides the best of rewards, a credit card also helps build your credit history. This article would suit those who are interested in using credit cards and those who already do but are unable to manage their debt.

How to stay out of debt

1.    Know the details of your card

Read the fine print details while applying for a credit card of your choice and have a complete understanding of your card. Know what fees you pay and all the benefits your card offers. Make sure it satisfies your needs.

2.    Know your billing cycle

When you get a credit card it is best to know your billing cycle. A billing cycle is for the expenses made for the month preceding the date of billing. This will give you an idea on when your dues are paid and how you can plan for the current month.

3.    Pay your dues on time

Whenever you use your credit card always pay your dues on time. Do not carry over the balance to the next month or attempt to pay only the minimum amount, delayed payments also affect your credit score.

4.    Avoid paying partial amount

Many people pay only the partial amount of their bill and try to carry over the balance for later. It is always best to pay dues in full whenever able.

5.    Do not take too many cards

Many people have the habit of having multiple cards. It is best not to have more than 2 or 3. This will keep you from maxing all your cards and stays you from temptation, there is also the factor of the effort of maintenance of two or more credit cards.

How to pay off your debt quickly

If you are already in crushing debt it's time you followed the steps below to get out of trouble

1.    Stop using your cards

Setup a budget and stop using your credit cards. Curb your spending and plan your budget in such a way that you still have enough to make monthly payments till your debt is paid.

2.    Pay off the highest debt first

Many will try and pay off their lowest debt first, but it is best to pay off the highest one as the interest will keep on increasing which over a period will become unpayable.

3.    Change your loans to EMIs

If you feel you cannot pay off your debts in a single payment, ask your bank to change the credit card dues into monthly installments. The banks will charge a 2%-3% and a processing fee of 1%-2%. Do read the conditions before converting your loans to EMIs

4.    Transfer the loans

If you have multiple cards try and spread the debt evenly or to a card with lower interest rates to make your payments a little easier.

5.    Don't close the cards after payment

Do not close the credit card after you pay off your debt. This is because of the higher the credit history the more the credit score. It also affects your credit utilization ratio as with no credit card your credit utilization ratio becomes zero. This will affect you later.

Even though credit cards give a lot of freedom for your purchases, it can become a nightmare if not used properly. It is best to get the credit card that satisfies your needs. Make sure you know all the details of your card before getting one. For the best credit cards and to improve your credit rating visit