Every time you swipe your credit card for some minor purchase, you probably thank the banks for coming up with this amazing innovation. However, what you do not realise is that you are actually being duped into spending money that you do not have. Credit card debts that come from our dependence on plastic money have the potential to wreck the strongest economies in the world.
When the entire world is spending money that they do not have, then where will all the deficit cash come from? So managing your credit card debt is not only your duty to yourself but also a social obligation.
Smart Ways To Manage Credit Card Debt:
Clear Credit History: If you are reading this article then we assume that you already have an outstanding credit card debt. Your first step towards becoming a smart spender is to clear all your previous credit card bills. This is called clearing your history because when you apply for home loan or car loan in future, financial institutions will check your credit history to see if you are financially reliable.
Interest Rate: Do you know what rate of interest your credit card is charging you? In most cases it is a whopping 30 per cent. Personal loans are expensive (20 per cent rate of interest) but it still saves you a lot to take a personal loan and pay your outstanding credit card bills. Clearing your debt should be your first priority if you want to spend wisely in future.
How Many Cards Do You Have?: If your answer is anything more than 2 or 3 then you are surely a bad spender. The more credit cards you have, the more careless you become about spending. Even if you have small credit card debts spread in between 5 cards, the sum total is a huge amount. What you must do is transfer all the outstanding bills to one card and then pay it off at the earliest.
Nothing Is Free: What credit cards essentially do is make you spend money that you do not have. We have moved on to credit cards from dealing in cash but out concept of money has not changed. Just because we do not dole out the cash physically we think we are not spending all that much. You have to realise that the huge flat screen television you are swiping your card for is not free. You will have to pay triple the amount for it.
Use Debit Cards: Nobody would advise you to start dealing in cash to manage your credit card debts. If there is technology then you must use it. Replace credit cards with debit cards; it will pinch you at first but eventually, it will make you a smart spender.
Do you know any other ways of spending money wisely?