Credit cards make shopping less taxing. It is popular for a lot of people. More and more individuals use a credit card in paying all their expenses- from basic commodities to leisure. However, others see it as nothing but pure evil. Why? It can lead to undisciplined spending and credit card debts. Credit cards indeed allow you to buy whatever you want. Understanding its basics helps you avoid the common mistakes that most people do.
Credit Card Debts: Knowing the Basics of Credit Card
It is not for everyone.
Credit cards can be dangerous in the absence of self- control. It makes you personally responsible for every purchase you made. So, if you think that you don?t have what it takes to own one, better get rid of credit cards before it?s too late. Use cash in your purchases instead.
When you use credit cards, you loan bank’s money to pay for the things you shop.
As expected, you acknowledge the fact that such money comes with an interest. As a credit cardholder, you are expected to repay the amount you loaned on a specific date. This is where problems arise. You will destroy your financial future if you fail to set payment on your outstanding credit card balance.??
What are the Ways to Pay Credit Card Debts?
If you are confronted with your credit card debts, don?t think that this is the end of the world. A lot of people were trapped in this mess as well. Below are some ways that you can do to put an end to this problem.
Pay your purchases using one credit card.
Start paying off balances by using one credit card for your purchases. It allows you to trim down your debts in months. If your goal is to improve your credit score, choose the card that you regularly use. Reducing card utilization rate by 20%. Self- control helps.
Make payments twice a month for credit card balances.
Paying the balance earlier reduces its interest. Regardless of how tight your budget is, make sure to set aside one-whole month payment on the second week of the month. Also, set payment of the same amount by the end of the month. You will pay the entire balance in months.
Negotiate a lower interest rate.
If your credit score is 730 or more, you have a greater chance to work on a lower interest rate for your credit card balance. A reduction of .1 or .2% of the actual interest rate makes a big annual saving.
Transfer your credit card balance to another company.
Though this idea helps pay off your debts, it should be dealt with caution. If you think that you can pay the balance within the agreed payment date, you are one step closer to your goal of zero debt. However, if you are hesitant of your capacity to meet the payment deadline, consider the deal off. Failure to pay the interest rate will end you up owing more to the company.
As you take advantage of this payment option, refrain from using you?re your credit card. New purchases entail higher interest rates.
Try peer-to-peer lending.
You can borrow as much as $25,000 if you have a good credit score and a stable source of income to pay for the money you loaned. Simply go to websites that offer products and goods you would like to buy. Then, get a loan at a fixed interest rate. This allows you to make purchases without using your credit card.
Like any other tool, credit cards can hit your finances badly.
But then, there is no need to worry because you can always get help. The above-mentioned ways to pay your debts have saved many credit card users all over the country. So, the moment you settled your balance, consider it a lesson to be learned.
Don’t get stunned with the comfort that these cards provide you.
Self- control is a must.