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    How to Avoid Credit Card Debt

    Invariably, credit cards come with an arsenal of benefits. They are also tailored to your specific spending patterns. They may be convenient, but they have an equal number of worries too. If they are not handled efficiently, you may end up with a heavy credit card debt.

    Here are few common mistakes leading to :

    Making only the minimum payment

    While using credit cards, it is important to make complete payment before the end of your billing cycle. If you only pay the minimum amount, you will quickly move towards a growing debt and fall into a debt trap. If the outstanding balance is higher, you will also have to pay a large amount of interest. A substantial amount of debt can also ruin your credit history.

    If you cannot pay the outstanding balance, you can contact the bank to renegotiate the terms. The bank might help you restructure and consolidate your debt. They can even decrease the rate of interest.

    Missing the bill’s due date

    The elementary rule of credit card usage is to pay the bill before the due date. When you miss the payment, a late fee will be charged to you and it keeps on adding every day till you leave it unpaid. The interest rate also increases. At one stage, making full payments will become very difficult. Hence, it is always advisable to be attentive on the bill’s due date.

    Taking cash advance

    You may have faced hard situations where you find it easy to take cash advance on your credit card. But, you may not be aware that the cash advance fee and the interest rate are very high on this facility. The interest is compounded from the day you borrow the money, without any grace period. It is, therefore, better to avoid making such cash withdrawals.

    Over-usage

    Tempting yourself to use card everywhere will land you in a heavy debt trap. Credit card issuers provide offers, cashback or rewards on your daily expenses like grocery, petrol, dining, etc. This may encourage you to use your card and earn more benefits. But if you overuse it without realising the credit limit, you will face huge debt.

    Owning multiple credit cards

    Too many cards means too many payments and due dates. With multiple cards you are more likely to miss your payments and increase your debt. It becomes difficult to keep a track of all the card payment due dates. Missed payments will again lead to late payment fees. Another disadvantage of owning many cards is the annual fee for each card. It will be an additional expense to you. Hence, only keep the cards that you use often.

    Using cards for rewards

    Each credit card has one or the other offer or promotions associated with it. The offers seem to be tempting, but you may have to alter your spending patterns to enjoy the benefits of these offers. Getting attracted to the rewards and constantly using your credit card can lead to heavy debt. Because, you are indirectly increasing your expenditure and making repayments difficult for yourself.

    Getting credit cards for welcome offers

    Most of us get a credit card to enjoy the complimentary offers coming along with it. Well, the welcome offers are generally bound by a minimum spend. You are over-extending your expenses to get the free gifts, which might land you in a debt.

    If you do not use your card judiciously, you will potentially fall into a debt trap. Having said that, you can always optimise your credit card usage and eliminate all the mistakes that will lead you to debt. Reading the terms and conditions of the card and also the offers/promotions can probably help you in keeping well informed. If you are aware of the facts and hidden conditions, you can take a better decision.

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