7 Tips to Get Smart About Debt

Your credit is an important tool; however, it can lead to your financial breakdown. So it’s necessary for you to use your credit prudently. Maintaining a good credit score and limiting your debts impact your financial wellbeing critically. If you exploit your credit or rack up debt, this will negatively impact all of your personal finances.

Here are 7 tips for you so you can manage the debt, save more, and be financially healthy:

1. Learn how to use credit cards responsibly

Before you apply for a new credit card, understand how to use the credit card properly, the advantages as well as its demerits, how it helps to build good credit history and how it can destroy it too, learn how and when the interests and charges are levied. 

Credit cards sure do bring easy cash; however, it’s important to remember not to use them recklessly without knowing their effects.

Apply for a credit card online after thorough research on the various banks and the types of cards offered by them, features and costs associated, including Credit card interest rate.

2. Pay more than the minimum monthly payment

Know that if you’re only paying the minimum amount, you’re going to end up paying far much more to your lender. Why? Because if you carry any outstanding balance on your credit card, that balance will accrue interest daily. The only way to avoid getting hit with this interest would be to pay off the entire outstanding balance by the due date. Also, if you keep making only the minimum payments, you will inadvertently take a much longer time to repay your debts completely.

Credit card interest rates differ from bank to bank and card to card, so consider switching to the lower rate cards.

3. Fix your spending habits

If you spend more than you earn, fix your habit. Changing how you spend your money is the first step to be efficient enough to manage your finances well. Implement some money-saver techniques like utilizing discount coupons, reward points, get free oil- change. Learn to be frugal so you can achieve your financial goals.

4. Regularly check your credit report

Your credit report significantly impacts your capacity to borrow, so you need to make sure the details it contains are correct and positive. It reflects every lender you have owed money to in the past and your current debt position, your debt repayment history. 

Mistakes on credit reports can be quite common, so review your report regularly to confirm that your personal information is accurate and that the debts not taken by you aren’t listed there. Also, ensure yourself with the details of all the money you owe. It will take some effort, but you will end saving more by being able to detect the problems early on.

Apply for credit card online, which doesn’t pull a hard inquiry on your report more than once a year.

5. Don’t ignore your bills 

If you miss the due date, every lender will slather on the late fees or Credit card interest rate charges on your account. In those cases, instead of paying off what you owe, you end up accumulating more debt. If you find it hard to make your payments on time, you can arrange for an automatic online payments system. This way, money can be automatically paid from the account, and stress about missing the due dates is reduced. However, make sure that you always have enough funds in your account.

6. Have an emergency fund

Imagine you are trying to actively manage your credit card debts, and then an emergency comes and sucks you right in the ever-growing debt hole. Consider building an emergency fund that will help you restrain from using your credit cards in emergency situations.

7. Create a debt management strategy 

Managing your credit card debt primarily includes having a solid plan to repay what you owe as early as possible and avoid the extra burden of late fees, interests, and various penalties.

Three approaches you can take to pay off your credit debt:

1. The snowball method
2. The avalanche method
3. A mix of above both methods

In the snowball method, you start off by paying smaller debts first and be motivated to break free of your debts. You keep paying the smallest possible debt amounts step by step until you have repaid all of it. 

In the avalanche method, you do the opposite. You start with the credit card debt that carries the highest Credit card interest rate on it as you continue making minimum monthly payments on your other debts. 

The third method combines both of the above methods, and that means in the start, you may pay the smallest debts first to lessen the mountain of debt and then move to bigger ones. You can also reverse it depending upon your choice and the funds available to you for repayments.

Apply for credit card online at MyLoanCare with ease through the website or the bank’s app. This will save you a hassle about documents and going to the branch; however, be vigilant about the credit you obtain.