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5 WAYS TO SAVE YOURSELF FROM CREDIT CARD DEBT

  • 02 Sep, 2019
  • |
  • Team Credit Karo

5 WAYS TO SAVE YOURSELF FROM CREDIT CARD DEBT

Warren Buffet, the fourth richest person in the world and one of the most influential people our planet has to offer once famously said that- “ If you buy things you do not need, soon you’ll have to sell things you need”. We understand the value of these words when you sit down and contemplate how much we’ve spent on stupid stuff without thinking twice. The moment your salary arrives, and you get a notification on your phone, that’s the moment it all starts. You start calculating how much is to be kept aside for bills, pre-decided expenses, debts and most importantly the credit card bill.

All of us have this one weakness that we are unable to overcome, the ‘credit card’. No matter how much we try to resist it, we always end up buying something expensive and put it on our credit card and promise ourselves to pay it back on time to avoid the interest rate and late charges and eventually fall behind on pay dates most of the times and then regret at the end of the month for not saving enough. This cycle continues and becomes a never-ending process and you end up living on credit for major part of the month.

Each month we tend to come up with innovative ways to save our money and utilize it to it’s optimum capacity and then end up regretting at the end of the month because of unnecessary wants – every little craving, expensive accessories, that one expensive dinner, or that vacation you’ve been waiting for. All these reasons tempt us to depend more on our credit cards and that is the moment our saving plan goes for a toss!

Today, we’ve come up with 5 tips that might help you save up a little extra at the end of the month. Thank us later!

 

PRIORITIZE YOUR EXPENSES-

As soon as money arrives in your bank account, we list out the things we’ve been waiting to buy since last month. We put all our wants on the top and all the important needs in the end, which eventually forces us to use credit to meet our needs. The wise thing to do is spending on important expenses first, the ones that you can’t do without like paying off bills, buying essentials for the month or saving some part of the amount. After making such expenses, if you feel you have ample money to spend on leisure or an expensive gift for yourself, maybe you won’t feel that financial burden Afterall.

 

BALANCE TRANSFER –

One wise trick you can apply is if you have multiple cards, you can consolidate those balances onto the one which has lower interest rate. This process involves transferring money owed on one or more cards to one card that has lower interest rate. This could save you a lot of money in interest charges levied on all your expenses. One thing you’ll have to keep in check is the balance transfer fee which is usually 3 to 5%.

 

CUT DOWN THE WASTE FROM YOUR EXPENSES-

It may sound a bit cliché but it’s true! You need to get hold of yourself and stop wasting money just because you have it. Every Friday doesn’t have to end with you getting sloshed, ordering food online doesn’t have to be a regular thing, every weekend doesn’t have to end in a shopping spree. We are not telling you to stop enjoying life for that is what you are saving for but if you keep spending recklessly without a second thought you might end up broke at the end of every month and may not have enough money in case of an emergency or when you need it the most. Using your credit card is not the solution but an option, you need to understand the thin line.

 

UTILISE YOUR SAVINGS ACCOUNT-

It is a good habit to save money for the future and most importantly for emergencies, but the interest earned on savings account is very less than what you pay as interest on credit cards. A savings account can earn you about 4 to 6% interest but a credit card bill may require you to pay anything between 18 to 40% , so it sounds stupid to save that money which you could use to pay off a credit card bill before due date so that you don’t have to pay extra charges. When the credit is settled, you can start saving up again. The point is that if you spend a little extra saving into your debt, it will be settled before you realize it.

 

KEEP A CHECK ON YOUR USAGE-

The best way to stay away from a credit card debt trap is to stop taking out your wallet from your wallet for every little thing. You don’t have to pull out your credit card every time you are at a store buying something. Credit cards are convenient but that that doesn’t meant it is relevant to use it all the time. The interest charged on credit cards is way higher than anything else, even loans! So, the wise thing to do is to keep E-wallets handy, pay in cash and depend on debit cards to make transactions which are small in nature. Otherwise each purchase is mounting up the interest which will then increase your expenditure failing the whole purpose of having a credit card. Use the card when you feel the amount is large and it will be wise to pay it in EMIs.

 

Wants will never end, same is the case with needs. Giving priority to needs more than wants will help you save more in the longer run. If you think wisely before making an expense, eventually you’ll realize it’s not that hard to save your own hard-earned money.

We hope you enjoy reading our blogs, because we love coming up with new stuff for you every week! If you want us to write about something, do write to us and tell us what you want to read about. Spend your money wisely so that you don’t fall into a debt trap. In the end we’d like to sign off with another quote from Mr. Buffet – “Do not save what is left after spending but spend what is left after saving”.

Till then…happy buying!

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