You may hear lots of fascinating things about credit cards but the fact is that they are nothing but a simple form of debt. Now, the trick is in the use of credit card. If you can use it with caution and with intellect then it will not cost you a penny.
1. You will never become a borrower! Some clever and agile use of credit cards can bring all the benefits but you will never incur any debt on your shoulder. Just use the card to purchase according to your ability to pay off the bills before the billing cycle ends. Never make the credit cards the source of your revolving debt that lasts forever.
2. Decide when to charge a credit for short term loan. If you have the ability to repay the charged amount within a very short time like 2, 3 or 4 months then it is worth charging a credit even if the interest rate is 21%. If you took the same loan for a term of two years, it may cost you a lot.
3. Repayment is the main difficulty. As long as your credit card limit is low there is no worry but as it begins to increase, you feel encouraged to charge it more often and inevitably bear a debt burden. The repayment becomes lengthy, the interest starts to compound and you wonder what actually has gone wrong.
4. Debt is not good for your credit score. Carrying on credit card balances will not bring anything good for your financial position and it is also bad for your credit score. You keep your outstanding well below your limit, as low as 35 percent. If you have a limit of Tk 1.00 lac then your balance should not exceed Tk 35000/-. You should also pay your monthly bills on time. In case you miss any bill payment then you will be reported as a defaulter and your credit score will suffer a lot.
5. Develop a repayment plan. A suitable plan can take you out of a deep sea of debt. Use the following strategies.
• Restrict your expenses only to necessities. Then, you will have spare cash to pay off the dues.
• Request the credit card issuer to reduce the interest rate for you.
• Pay back the balance for which the issuer will charge the higher rate of interest.
• Do not punch your card while you are struggling to repay the debt.
6. Seek help if you fail to repay the bills. Never panic when you are unable to even repay the minimum bill and carry on the balance. You should contact your credit card company first. If they do not provide you with help then you can ask help from experts or your reliable sources.
7. Settle cautiously. When it goes beyond your reach to repay the debt, you should become very prudent to pay the bills. You should wait until the credit card company allows you to pay a lump sum amount and wash out your full debt. In such a way you can avoid paying the full debt but still you can get rid of it.
8. Failure to repay a bill does not mean you are a criminal: Just because you fail to repay a bill does not mean that the police will come and arrest you. However, you may face legal proceedings if you do so. The credit card company can sue you if you do not cooperate with them in reducing your debt. You should charge your card according to your limit and monthly income and in that way you can live debt free.
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