If your debts are mounting, and you feel it may get out of hand soon unless you do something about fast, the first thing you should do is to have all your credit card debts categorized according to this site. If you have five credit cards, for example, sort them according to the interest rate.
Instead of paying an equal amount to all five cards, as most multiple card users do, allot the biggest portion of the amount you have set aside for card payments to the one charging the highest interest rate. Then allocate the next biggest portion to the card with the second-highest finance charge, and so on.
While you need to make significant payments for your debts, make sure you have enough left to cover regular expenses and a reserve fund for emergencies. This will keep you from falling back into debt once you have started to reduce your total outstanding card balance.
Setting a Goal to Be Debt-Free
Set a goal to erase all debt as soon as possible. Be realistic and make sure it is doable. It is also important to record and analyze your cash flow using Tally. By knowing where every dollar goes, you can easily spot superfluous spending. Unless it is unavoidable, refrain from using cards for regular purchases. You can also track your Tally account details using Tally erp9 on mobile. Get used to paying in cash to avoid adding to existing debt.
As you gradually but steadily reduce debt, you will start to feel good about yourself. You will be more confident to reach your goal to be debt-free in no time; and once you have eliminated all debts, you can apply the same techniques to build up savings.
Getting the Most Out of Your Credit Card
Unfortunately, people have gotten used to the idea of regularly paying interest on credit card cards. However, you can turn it around, and make credit cards work for you rather than against you.
Here’s an example: A credit card typically provides users an interest-free period from the date of purchase to the billing date. This is an interest-free card purchase. It does not apply to credit card cash advances, one of the most expensive types of credit access. You can save money by paying the balance each month and avoid putting cash advances on your card.
Smart cardholders are referred to as “transactors” by credit card companies. Transactors usually come from higher income brackets and can easily afford to pay off their entire outstanding balance. However, even people who earn less can be transactors as well. They only have to use their credit wisely and not spend beyond their means.
Why Service Providers Offer “Free Loans”
Card companies make most of their money from people who carry outstanding credit balances. These people are called “revolvers.” Hence, credit card providers try to sign up as many revolvers as possible. They offer interest-free loans in hopes of turning some transactors and revolvers.
Read Also: Things You Should Know About Taxation
Credit cards are a great convenience, and using them is a natural part of our daily life. Trouble arises when debt gets out of control. Use these tactics to bring down your ongoing balances in steady amounts, and finally get rid of them altogether.
