Don’t let your credit card bills get monstrous

Credit card companies entice customers with many exciting and attractive offers. People often assume that reason behind the high credit limit offered to them is because these organizations know that you can pay it off. However, it is not their duty to know whether we can repay it but our responsibility to spend only that much which we can afford.
Interest rates of credit cards vary from one card to another. These rates could be as high as 33%. If you pile up a fairly large sum of debt on your credit card and plan to pay it off by paying only the minimum balance each month, then it will take you years to clear the debt. You can repay the original amount loaned in few months but every month the interest and the finance charges will accrue on the billed amount and the debt will keep on growing. It is a vicious cycle that you must break otherwise you will end up repaying a sum much larger than the actual debt. It is, however, profitable for the credit card companies as more you delay to pay off your debt more interest they can charge you. For a temporary quick relief, many of us opt for balance transfer to transfer the balance from high interest to low interest rate credit cards or low introductory rate credit cards. However, be informed about regular rate after the introductory period is over or else you may end up paying more than before you transferred. Moreover, sometimes banks may charge you the full interest rates if they find your interest rates inconsistent.
Credit cards have made spending easy. People don’t think before swiping their cards and very easily become irresponsible credit card spenders. Here are few tips which will help you control your credit card usage and thus make you a responsible spender.

• Be informed. Learn about credit card billing dates and interest rates. Find out the definitions of credit limit, APR, balance transfer balance, etc. It is better to learn all about credit cards before you start using them.
• Plan a budget. Planning a budget and sticking onto it is like riding a bicycle. In the beginning you will be unsure but once you get your balance, you will never forget how to do it. Make a budget to understand where you stand in terms of finance. Based on the budget make a shopping list before you go shopping. Plan a spending limit. Keep a track of your spending so that you know where your money is going. Don’t despair if you can’t stick to your plan, but this planning will get you one step closer to your goal. Next time you go shopping, use this plan as your spending guideline.
• Stop carrying credit card always. Restrict our credit card usage. Carry cash instead of credit cards on casual shopping and reserve you credit cards for emergencies. When you watch your wallet get thinner you tend to hold on to it and that way you can control temptations.
• Pay off your credit. As the saying goes ‘prevention is better than cure’ you should also prevent the debt monster from growing. Don’t let the debt pile up and pay off your balances every month. If you were in a habit of paying off only the minimum amount then change this habit and try to repay the entire billed amount.
• Manage your finance. Be a responsible finance manager. Plan for future beforehand and save money. Emergencies, birthdays, holidays are part and parcel of life hence save money for these in advance. If you are prepared for them then you don’t have to rely on your credit cards when time comes. If, even after brainstorming, you are not able to find out an alternative then ask for others opinion. Talk to someone who will actively help in finding the alternative solution rather than someone who is going to judge you. One easy way to control your spending is to shop only when you need too. Unnecessary spending makes you a spendthrift, which is bad for someone who wants to avoid credit card debts.
• Avoid withdrawing cash. Withdrawing cash from credit card is a convenient but costly job. Interest charged on the cash withdrawn from credit card is very high. Thus these interests will add on to you credit debt making the debt humongous.
• Know your net worth. Net worth is calculated as total liabilities minus total assets. If you haven’t already calculated then this is the perfect time to this. Net worth gives you the bird’s eye view of where you stand financially which in turn helps you in better finance management planning.
• Control your emotions. Most of the time shopping is associated with emotions. We get impulsive and tend to buy something which we don’t need but we want. If you get the urge of buying something just because it makes you feel good then wait for 24-48 hours to give yourself a cooling off period before purchasing, the buying impulse would be gone by then.

Effective asset management requires discipline. Refrain yourself from using credit card every now and then. If you do use your credit card on emergency then make it a habit to repay the loan on time. This habit will surely pay off. If you turn yourself into a responsible spender then you don’t have to dread the debt and quit credit cards cold turkey.