Some people consider credit cards a complication and tend to avoid them. However, some experts believe that one should start one’s engagement with credit cards early in life, as it helps one build a good credit history if managed well, and get the benefits while living a debt-free life.
The catch of credit cards, along with using them extensively, is clearing the dues at the right time. Experts say, the reason behind using a credit card should not 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 works. This way the cardholder gets the advantage when accessing financial products such as loans.
Having a high credit score demonstrates one’s ability to make payments on time, thereby enhancing the individual’s creditworthiness. Additionally, the cardholder also gets to win reward points and exchange them for discounted products, travel miles, and other offers.
Choosing the right card
There are numerous credit cards available today, and choosing the right one is important. All might seem similar to a newcomer, but different credit cards are designed for a wide range of individuals with varying incomes, needs, and goals. Hence, experts say one needs to find the ones that suit their lifestyle and income.
For instance, for frequent flyers, a travel-centric credit card instead of a generic one will be more beneficial. similarly, an individual just starting with their career should avoid opting for a premium card – with maintenance changes, monthly/yearly spends and yearly charges could easily land them into credit card debt.
Know your card charges
While landing with a credit card, know its interest rates, credit period, time for repayment, etc. Credit cards become expensive with their various charges that get added and pile up, only when the dues are not cleared. There are several fees associated with credit cards, such as interest rate, annual charges, late fees, one’s credit limit, the foreign currency markup fee (travel abroad), etc. Experts say one should learn about the various fees charged to dodge credit card debt. Hence, it is important to go through the fine prints.
Dealing with multiple card debt
If you are in the unfortunate situation of having multiple credit card debt piling up, experts say, under such a situation, one should start by paying back the card with the highest interest rate first. At the same time, try to keep paying the minimum amount of the other cards until the card with the highest interest rate is paid off first. Keep in mind to not only pay the interest amount but spend more money paying off the principal rather than the interest at least for one card at a time.
To get rid of credit card debt faster, experts say one could try and get a debt-free loan from a family member, or a friend. Alternatively, one can also opt for a lower interest rate loan with them.
Transfer your debt
With the approach of a balance transfer, the due amount of a credit card can be transferred to a much lower interest rate. Multiple banks offer this facility and allow cardholders to transfer the dues on multiple cards to a one transfer balance credit card. This brings down a card holder’s interest rates and helps with the debt payment process.