The road to credit card debt is piled up with good intentions – Mistakes to avoid
Whether due to carelessness or confusion, credit card debt is too common among the credit card holders in the US. You may end up in blows due to racking up credit card debt, irrespective of the reason. A single slip-up can lead to higher interest rates, unwanted fees and lower credit limit that will soon lead to a ding in your credit score. The road to credit card debt is most often paved with good intentions but by taking too many good financial moves, you land up in a financial disaster. There are too many debt questions hovering in the minds of the debtors and majority of them are not able to get back on track due to sheer ignorance. As there are many who forget that credit cards are loans that need to be repaid, there are an increasingly large number of people who are overburdened under the crushing burden of debt. Have a look at some of the credit card mistakes that you should avoid making in order to keep high interest debts at bay.
- Does substituting credit for cash lead to credit card debt?
There are many credit card holders who love to substitute credit for cash while purchasing things and they’re the ones who incur debt sooner than the others. If you have the habit of purchasing the everyday groceries with your credit cards, you might still be paying off the debt amount long after you’ve consumed the goods. Debit cards are still better but when your wallet is stuffed with credit cards, all you can do is to restrain yourself from resorting to them. Use cash instead of credit while buying things.
- Does paying your bills late boost your high interest debt?
Yes, according to most financial analysts, making late payments is the biggest foul when it comes to credit cards. The consequences can certainly include late fees, lower credit score and jacked up interest rates. Once you start defaulting due to the high rates and the rising monthly obligations, you will start piling on debt. Cards that carry APRs like 13.25% can jump up to 29.99% due to a late payment. You certainly can understand the boost in the monthly payments!
- Can mismanaging balance transfers increase the amount you owe?
Transferring debt from a high interest card to a low interest rate card can certainly make enough financial sense but only when you read the fine print of the new card. Bungling balance transfers will certainly end in increasing the debt amount that you owe. If you ignore reading the fine print of the new card or you misunderstand the agreement of the card, you can end up boosting your credit card debt level. Determine the introductory period so that you may know the time for which the low rate will prevail on the card. Then ask yourself whether you can transfer the entire balance within that period. Choose to transfer your balance only when you can pay on time.
- Does making just the minimum payments keep you indebted for a longer time?
Most of us are aware of the fact that we should make more than just the minimum monthly payments on our credit card bill. But how many of us are able to do this? It’s certainly easier to devote that extra $50 towards dinner instead! People don’t understand the difference that these extra payments can make and this is the reason they’re not serious about it. Don’t go by the advice of the banks and the credit card companies that you can make just the minimum payments as this will make you indebted for a longer period of time. Pay more than the scheduled minimums and get rid of debt sooner.
Credit card debt can become a burden if not attended immediately. Above mentioned are the answers to the most common debt questions and you can certainly follow the facts in order to avoid being debt.