Some people view credit cards as a complication and tend to avoid them. However, some experts believe that credit cards should be started early in life as it helps one build a good credit history if managed properly, and reap the benefits while living a debt free life.
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The catch of credit cards, along with their frequent use, is clearing the dues at the right time. Experts say the reason behind using a credit card shouldn’t be limited to being able to buy things on credit, but the process of building a concrete credit history by paying the bills on time. In this way, the cardholder gains the advantage of access to financial products such as loans.
Having a high credit score demonstrates one’s ability to pay on time, improving the creditworthiness of the individual. In addition, the cardholder can also earn reward points and exchange them for discounted products, travel miles and other offers.
Choosing the right card
There are countless credit cards available today and choosing the right one is important. All of them may look like a newbie, but different credit cards are designed for a wide variety of individuals with different incomes, needs, and goals. That’s why experts say you need to find the ones that fit their lifestyle and income.
For example, for frequent flyers, a travel-oriented credit card instead of a generic credit card will be cheaper. similarly, a person just starting out in their career should avoid opting for a premium card – with changes in maintenance, monthly/annual expenses, and annual fees, they can easily get into credit card debt.
Know your card costs
While landing with a credit card, you need to know the interest rates, credit period, time for repayment, etc. Credit cards get expensive with their various charges that add up and pile up only when the dues are not settled. There are various fees associated with credit cards such as interest, annual fees, late fees, one’s credit limit, the foreign exchange surcharge (travel abroad), etc. Experts say one should know more about the different fees charged brought to evade credit card debt. That’s why it’s important to go through the fine print.
Dealing with Multi-Card Debt
If you find yourself in the unfortunate situation of multiple credit card debts piling up, experts say that in such a situation, you should start by paying back the highest-interest card first. At the same time, try to keep paying the minimum amount of the other cards until the card with the highest interest is paid off first. Keep in mind that you’re not just paying the interest amount, but you’re spending more money paying off the principal rather than the interest, on at least one card at a time.
Debt free loan
To get rid of credit card debt faster, experts say you could try getting a debt-free loan from a family member or friend. As an alternative, you can also opt for a loan with a lower interest rate.
Transfer your debt
With the balance transfer approach, the amount owed can be transferred from a credit card to a much lower interest rate. Multiple banks offer this facility and allow cardholders to transfer the membership fee on multiple cards to a credit card with a single transfer balance. This lowers a cardholder’s interest rates and aids in the debt payment process.