Today, more and more number of people have started using credit cards. This is because the mindset towards digital modes of payments especially regarding security and safety is changing now. The card issuers are also offering a slew of discounts on select shopping centers, online stores, etc. to attract more customers. However, this doesn’t mean that you should use plastic money without any concerns. If you are building up debt with your cards with unnecessary purchases, then it can lead to low CIBIL score. So, it’s important that you take the following measures:
If you are earning a high income and your repayment history is spot on, then your credit card provider may increase your card limit. With this, you are able to purchase more expensive things or a greater number of things. However, it’s important that you don’t try to utilize this increased credit limit unless you really have to. Think of the high limit as an option that you may need to use in an event of an emergency. However, for the most part, keep your spending habits within control.
People often develop a habit of carrying their credit cards in their wallets/purses. This convenience makes it easier for them to purchase unnecessary items on a whim. After all, if you find something interesting that you want to buy, then all you have to do is swipe your card through a POS terminal, and that’s it! Unfortunately, this encourages bad spending habits which you can easily avoid by leaving your cards at home when you go out.
When people overspend with their cards, then usually there is actually human psychology behind this habit. This is because first, when you can pay for something even when you don’t have the money for it now, then the option can be quite attractive. Second, you don’t really feel the pinch of losing money even if you are buying Rs. 30,000 worth of smartphone as you don’t feel the transaction in a physical form. On the other hand, when you pay with cash, then as you count the money in your hands, then you can actually realize the impact of that transaction and feel the gravity of the situation. This forces you to be more responsible with your spending habits and truly value your hard-earned money.
The takeaway point here is that if you are able to use cash as much as possible rather that credit cards, then you can minimize unnecessary purchase to a huge extent.
Financial experts always put emphasis on creating a well-planned budget to get your finances under control and avoid major problems like becoming a loan defaulter or getting a low CIBIL score. Naturally, it can also bring your own credit card debt down.
If you think that creating a budget is too complicated and time-consuming, then you will be glad to know that there are all kinds of apps that you download on your smartphone to simplify the process and get started instantly. Most apps just require you to enter your average monthly income, details of fixed and varying expenses, amount of money you want to save per month, etc. All of this is just some basic information that can be provided in a few minutes to ensure a safer financial future.
If you have received a credit card bill that’s too high for you to cover, then you may get the option of minimum payment in which you just need to pay around 2% of the amount. This will make sure that you don’t have to pay a fine or face any other kind of action. However, what you may not know is that the remaining 98% of the balance is transferred to the next month. This increases your debt and may even lead a low CIBIL score if you are using the minimum payment option repeatedly. So, it’s better to clear every single bill on a monthly basis instead.
Credit card management doesn’t have to be challenging. If you are careful and responsible enough, then you can control your debt without any major problems. At any rate, the tips above should be able to help a lot.