Some easy steps to control Credit Card bill only experts may know.
You may love to shop. Instant gratification can be your thing. Also, you may have only one salary, so it’s not always easy to feed all your indulgences. Therefore, you take to different ways to manage your cash flow and find yourself turning to your credit card often. I have always paid the full amount but very often, I come across friends, who pay the minimum due amount every month. This is when they accidentally enter into the vicious debt cycle. 3% a month, becomes (3*12) 36% per annum, which is an exorbitant sum.
You may love to shop. Immediate delight can be your thing. Also, you may have only one salary, so it’s not always easy to feed all your allowances. Therefore, you take to various ways to manage your cash flow and find yourself turning to your credit card often.
Of late, you may come to realize that you were spending more money than you could afford to, because of the sheer comfort of having a credit card, or multiple ones. You were spending money before you had even earned it.
I decided to inscribe this troubling situation and put a leash on your habits. I have come up with personal tactics to achieve this and would like to share these tips with you, as well.
1. Pay the full amount, not the minimum due amount:
I have always paid the full amount but very often, I come across friends, who pay the minimum due amount every month. This is when they accidentally enter into the vicious debt cycle. 3% a month, becomes (3*12) 36% per annum, which is an extravagant sum!
I saved myself the burden of unwanted debt, and you should too – take to more disciplined spending.
2. Maintain only one credit card and choose it wisely:
I gave up a credit card to ensure that I only have and use ONE credit card. My friends’ experiences with multiple credit cards have been akin to horror stories about an insane amount of credit card debt in addition to education loans.
One of the major advantages of credit cards over debit cards is the benefits they bring, in the form of bonus points and cash back options. Before I chose my one card, I read through these advantages carefully. You should opt for a credit card which gives you considerable saving options on the type of expense you have.
3. Divide your expenses:
Firstly, I have started to divide my expenses across the diverse instruments of spending, such as:
a. Using petty cash for small indulgences like an impulsive coffee plan with friends after dinner on a Monday.
b. Using net banking to pay off bills every month and also to fund my Digital Wallet – mainly to pay for my cab rides.
c. Using a debit card for big expenses such as buying an expensive dinner with friends.
d. Finally, I would use my credit card only for small transactions, when I do not have any cash with me, such as retail therapy, grocery shopping, or the occasional fast food indulgence.
This helps me automatically minimize the loan that I am taking through my credit card. Now, I try my level best to ensure that my monthly credit card bill does not exceed 10% of my take-home salary.
4. Auto Pay:
I now use the autopay or auto-debit option for my card bill. I am subconsciously aware that my bank account will be hit on a certain date every month, and I have to maintain the appropriate balance, to keep the payment from failing. The auto-debit also save me the task of paying the bill manually.
Sometimes, it is better to have external circumstances control us, especially if we lack internal discipline. It happens to the best of us!
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