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Credit Card Debt Is Your Financial Worst Enemy

Credit card debt is a recurring debt you are allowed to owe as long as you don’t exceed your credit limit. A credit card account is tempting as you can get whatever you want on credit as long as it is within your limit. It is always advised that you shouldn’t make purchases you cannot afford to cover at month-end. Another tricky feature of a credit card account is their interest rate charges on your debt until you fully pay. Payment is usually due at month-end and failure to pay as and when due would result in the accumulation of your debt as annual interest will be charged on the amount owed. There is also a minimum payment of 1% to 2% of your balance plus other charges that must be made to ensure you keep crediting your account. If you pay less than this minimum payment, interests will be charged, and it will keep on accumulating. Owning a credit card account can be a nightmare if not properly managed.

Tips On How To Overcome Credit Card Nightmare

The basic truth about overcoming a credit card nightmare is by taking charge of your spending. If you get this right, then you will enjoy the benefit of a credit card account. Here are some tips on how you can overcome your credit card nightmare:

  •  Know Your Credit Card – Get as much information as you can on your current credit cards or potential ones. Research the issuer’s payment schedule and other terms and conditions. Be sure to confirm the interest rate and other fees that will be charged if you delay your monthly payment. You can set up automatic payments and calendar alerts to avoid falling behind on your payment.
  • Be Disciplined – You should set spending rules on your credit card that you must follow. You can set a limit on your credit card expenses in a month. This will give you control of your spending and ensure that you live within your means. It is advisable to charge on your credit card what you can normally pay for with cash or debit card.
  • Keep Track – You should routinely keep track of the status of your account at least every week. Charges accumulate without notifying you, so it is advisable to check your account at least once a week to know the state your account is in. Adopting this principle will help you track your credit card debts, the types of credit you have, and your repayment history. These are what lenders will use to rate your credit score.
  • Avoid Cash Advances – Having a credit card account that can take care of things when you can’t afford it is quite tempting. You tend to want to take cash advances because you know you have a credit card account that can take care of things. Cash advances from your credit card account result in higher interest rates and transaction fees. There is no moratorium on your cash advance. Interest is charged immediately you take the cash advance. Avoiding a cash advance will put you in full control of your credit card account.

Tips On How To Prevent Accumulation Of Credit Card Debt

Credit card debt is easy to accumulate but difficult to do repay. The only way to avoid credit card debt is to prevent it from accumulating in the first place. Here are some tips on preventing credit card debt accumulation:

  • Negotiate Your Interest Rate – Negotiating your interest rate on your credit card debt will go a long way in reducing credit card debt accumulation. The interest rates on your credit card debt are what make it difficult to settle your debt. Negotiate your interest rates with your credit card issuer so you can get the best deal possible.
  • Forget You Own A Credit Card Account – Once you are in a credit card debt, a trick you can try to prevent accumulating debt is to put your credit card away for other purchases, at least until you meet up with your monthly repayment. That is why it is advisable to use your credit card for short-term financial needs such as utilities, groceries, and some other monthly bills. This will lighten the burden on your credit card account by keeping your balance within a reasonable limit. If you can avoid using your credit card for a while, it will go a long way in reducing your debt burden.
  • Pay Your Debt As and When Due – Simply put, what makes your credit card debt pile up are the charges and interest rates on delayed payments. The best way to get over this is to pay your credit card debt as and due. Missing a due payment can leave you playing catch up. Your next payment will be for two months.
  • Watch Your Spending – A credit card account can leave you spending lavishly but you need to caution yourself and stick to what you can afford. Going for everything you see for sale is part of what gives you credit card debt. It is advisable to always avoid unnecessary spending.

Five Credit Mistakes You Should Never Make

In our everyday life, we spend so much on bills and other financial expenses we feel like a superhero when we wonder how we have managed to keep things together. One of the ways you can stay afloat and not drown in expenses is by having a credit card account. A credit account is a type of account that allows you to borrow money from your account to cover your monthly expenses.

You are however required to pay back money borrowed with interests and other additional charges. The line of credit you can borrow depends on the level of your debt. You have the option of paying your debt monthly or after each statement cycle. The nature of a credit card account makes it easy to accumulate debt which could be difficult to get out of. It offers a continued balance of debt option which makes it easy to accumulate debt. To avoid this kind of debt situation with a credit card account, here are some tips on the mistakes you should never make with a credit card. 

Mistakes You Should Never Make with A Credit Card

  1. Maxing Out Your Credit Card – When you max out your credit limit, apart from the huge debt profile, you also have other issues to be worried about. You may find it difficult to obtain another credit card account because of your credit score. You will also attract an Annual Percentage Rate (APR) which will be charged on every late payment. It is advisable to set a limit to your account to caution you and prevent you from maxing out your account.
  2. Paying Late – When you make late repayments on your credit card account, it damages your credit score and may put you in the bad books of your credit card issuer. A month’s late payment could reduce your credit card score by as much as 100 points. Imagine you are late for 3 months or more. You also stand the risk of accumulating APR on your late payments which increases your debt profile. The remedy to this is to ensure that you pay your credit card debt as and when due.
  3. Minimum Payment Habits – There are minimum debt payments you are required to meet every month on your credit card account. however, it is not advisable to only pay the minimum payment every month. You are still susceptible to APR charges which will increase your debt profile. To avoid this, try as much as possible to pay more than your required minimum payment.
  4. Not Reviewing Your Account Statement – One common and avoidable mistake you can make on your credit card account is to overlook checking your account statement on a regular basis. Reviewing your credit card account regularly allows you to know the status of your account and prevent reporting or charging errors and potential frauds from taking advantage of your account. if you cannot keep up with a weekly review, you should at least do a monthly account review to keep up with your bills and know the status of your account.
  5. Having Too Many Credit Card Accounts – In the short term, this might be a good idea because it gives you enough options to source for lines of credit to cover your expenses. However, in the long term, what this means is that you will not be able to keep up with the accumulated debt on different credit card accounts. These accounts will also charge APR which means more debts. Also, when you apply for a new credit card, the card issuer makes an inquiry on your credit card and too many inquiries may spook your existing lenders. You can take advantage of Pre-qualification forms which give you the opportunity to check if you qualify for a new credit card without damaging your credit score.