Credit cards allow consumers to spend more than they earn and make big purchases quickly and can be a boon for the consumer if used responsibly. But, abusing your credit card and making impulse purchases can lead to a debt trap, which can be very a challenging task to escape.
Here are some tips to avoid falling in the Credit Card Debt Trap:
Spend Responsibly and Spend what you can afford.
Just cause your credit card offers a high credit limit does not mean you abuse it and spend more than what you can afford. When swiping your credit card, remember that you need to pay back for the purchases you have made using your credit card. Spending responsibly and within your means can help you ensure not to fall into a credit card debt trap.
Pay Your Credit Cards on Time
Repaying your credit card bills within the due date can allow you interest-free credit, whereas delayed payments can lead to late payment charges, interest payments, etc. Credit card interest rates at the highest and can range from 18 percent to 40 percent per annum. Make sure you repay your credit card on time, possibly set up a direct debit with your bank account to ensure timely repayment.
Pay in Full and not in Instalments
While your credit card might offer you’re the luxury to pay in installments or even pay the minimum payment due amount, this option should be used rarely used unless a genuine financial emergency. Paying your credit card in installments attracts massive interest payments, and making a habit of only paying your minimum due to amount can lead you into a credit card debt trap.
Limit the Number of Credit Cards
You should limit the number of credit cards to just 1 or 2. Having multiple cards can often confuse users about their payment due dates and often miss them. This can lead to paying unnecessary late payment fees and interest payments.
Also, multiple credit cards can lead to impulse buying, which can lead to you spending more you can pay and lead you straight into a credit card debt trap.
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