Credit card use can result in unwanted debt; Here’s how you can avoid

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There’s so much hype and fear surrounding credit cards that some have even gone so far as to dub them “Satan’s tool.” However, regardless of the hype surrounding these plastic cards, you can’t deny that they come in handy when making purchases. These credit cards allow you to buy without having to lose the money in your savings account, but these advantages come at a cost which can be high if they are not paid on time.

Credit card debt is something that bothers a lot of people in today’s generation. Millennials who don’t know how credit card companies charge end up collapsing paying back a huge amount in penalties and interest. This, coupled with new hacks like revolving credit card usage and interest-free periods, has pushed many users into an inescapable debt trap.

Not that credit cards are all bad. How you use them is a big factor in whether these cards are truly useful or just a source of debt to pay off. When credit cards trick you into spending more, remember that the problem is with you, not the card. Exorbitant interest rates only exacerbate the situation in which you fall into a vicious and endless cycle of debt and the resulting interest.

Pay the minimum amount due (MAD)

It’s good to be crazy with credit cards because paying the minimum amount due before the due date will save you from incurring late payment fees while protecting you from possible damage to your credit score. In addition, paying this minimum amount before the due date will maintain the regularity of your card account. However, this does not mean that paying the minimum amount due is sufficient as you will then have to pay interest on the outstanding balance. While paying off the MAD on time saves you from having to pay late fees, it won’t save you from the high interest rates charged by your credit card company.

Ignore hacks

Never fall for marketing gimmicks or hacks like using revolving credit cards or alleged benefits of having multiple credit cards etc. Credit card companies are using social media marketing to entice the younger generation to keep multiple credit cards. You will also find many finfluencers who advocate using multiple credit cards to enjoy longer interest-free periods. It helps to be simple. Stick to no more than one or two credit cards to escape the tendency to overspend and escape the burden of interest and late fees. Also, limit the use of these cards unless absolutely necessary. If you can’t buy something with cash, try using a debit card. Paying by credit card should be the last thing on your mind.

Debt may not always be overwhelming if you realize the need to get rid of it on time. Credit card debt is like any other liability that you need to get rid of or prefer not to incur. According to the most recent statistics available, out of every 100 people in India, three people use credit cards. The number is expected to grow as the industry focuses on how to encourage people to rely on credit for day-to-day transactions. Although this would be a big boost for banks and the credit card industry, the widespread misuse of credit cards can cause many people to spend their lives paying off unwanted debts resulting from purchases at credit.

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