Hello Readers! 

Credit Card, better say a magic card in the hands of shopaholics, yes, people who have the temptation of shopping, they simply visit the store, or online site, add things to their cart and enter the CVV number of their card, and they are all done with the shopping. This process is repeated again and again by the shopaholics.

They only realize that their credit card is not a magic card only when they reach the maximum limit on their credit card. Only after that they realize that they are now under debt repayment of their credit cards. However, still these people are relaxed as they convert the repayment into easy installment monthly repayment. But they are totally unaware of the fact that the amount that is left to be repaid attracts interest at an annual rate of anywhere between 36%-40%.

This fact is not realized by these people as it is very less noticed in monthly installments of repayment, what people see is the monthly installment is an interest rate of 3%-3.5%. Understand it through an example, if you have an outstanding amount of Rs 50,000 to be paid back to your bank, then a monthly interest of 3% works out to excess payment of Rs 1500 every month over and above the repayment installment that’s due.

Here the question that hits people's mind is, do they want to pay this much of a high amount to the credit card company? Are they liable for it and most importantly can they afford it?

For credit card holders, it's high time, you must start working on reducing that outstanding debt in a systematic manner and restrict yourself from the excessive use of your credit cards.

Following are the steps that can help you with the same:

STEP 1

As you are already under the debt repayment the very first thing is to come over this debt as soon as possible. Analyze your expenses and go cutting down the unnecessary expenses. This will help you speed up the process of debt repayment.

You can also go on reducing your luxurious lifestyle calls like eating out or shopping a lot on weekends. You just need to put brakes on your temptation till the period in which you are trying to maximize debt repayment. The more extra money you save in a month will help you pay credit card debt faster and the more early you can come out of the debt.

After you repay your credit card debt, it is still suggested do not overuse your credit card for your desire expenses.

Managing your income and expenses always help you from falling into debt. There are some non-negotiable expenses like utility bills and grocery bills which cannot be cut down but there are several ways to save money. Like you can go dropping your expenses over jars of peanut butter and chocolate sauce. Proper use of home appliances in the right amount only when required, help you save a good amount on electricity bills. You can easily save a few thousand rupees every month, just by doing this.

STEP 2

After you schedule your monthly installment for your credit card debt repayment, you must speak to your credit card issuer to lower the interest charge. The negotiation can be asked on the basis of continued use of the facility if eth issuer is your home bank. The negotiation can be settled out between the issuer and the credit card user.

STEP 3 

After you are out of eth debt of your credit card, now it is time to restructure what you earn, what you spend, and what you save, so that you can save yourself from falling into debt again. Remember, it is very easy to swipe your credit card and purchase things because when you swipe your credit card, your bank balance is not altered. You swipe your card at the supermarket, then at the clothes store or for online purchases all in one day but your bank balance doesn’t change or fall. This very thing creates a mindset that you can afford these things when you actually can’t. You only realize it when the repayment bill is in your hand which is beyond your monthly salary.

The most important thing that you need to do is to control your temptation. Use your credit card to buy things you want and not the things that you need. Many people for their basic expenses, tend to use a credit card which is not advisable. Keep your necessary expenses going out of your bank account so that you have a clear idea of what you can afford when it comes to your everyday lifestyle.

For things that you want, you can your credit card, but keep in mind that the use of credit cards should not exceed 15% of your allowed maximum limit.  

For any kind of query, you can contact us at Shri Ashutosh Securities Pvt Ltd., we are here to help you in any way possible.

Happy Investing!

(Mutual Fund investments are subject to market risk Illustrations are for example only, there is no guarantee of returns. Past performance is not an indicator/guarantee of future returns).