In the United Kingdom, Credit Cards debt is a prime example of unsecured consumer debt, accessed through credit cards. Debt piles up as a results when a client purchases an item or service through the card system . When getting a credit card for yourself, think about your present financial standing and how you intend to use it so as not to fall into the trap of credit card debt.
Because the fact remains that credit cards are extremely friendly and comes in handy, so how then do you use your credit cards to your advantage without running into debt? According to Experian’s latest State of Credit report, the average U.S. consumer holds about two bank-issued credit cards and carries a total balance of $5,551, it seems like a lot especially for people in their 20s but always remember that credit cards are loans that are required to be paid back with an interest rate of 15% and above.
As an immigrant in the United Kingdom, it can be very tempting to get a credit card for every single thing you do and to be honest, it helps with building your credit score, which is a good thing. However credit card addiction is a thing and it can be attributed to how easy is to rack up multiple credit cards each with an opportunity to spend more while also building up more debt.
This addiction typically starts in when personal income is quite low. So with it comes the feeling of extra wealth. This is basically eating in to the future and tying the rope of debt around one’s financial freedom.
Here are 5 ways to use credit cards without becoming a credit card junkie or a bankruptcy candidate
1. Create A Budget
If you do not have a budget, then what exactly are you on about. Most people give in to the false security credit cards provide them and start piling up debt against their future
Creating a budget cannot be over-emphasized. This is one financial habit you absolutely must adopt you if want to get a hang of your finances and help track your spending. This will not only help cut down in areas of excesses but also reduce spending.
2. Pay Your Bills Ahead
There is a type of credit card users who are known as the “revolvers” they do not pay off their bills in full so the debt revolves and keeps increasing. For them, more credit limit means more spending power. Although paying bills late is one strategy to stretch funds, but oin a way, it’s like paying Peter to pay Paul. Because at the end of the day, it only give a false of security, by paying your bills ahead of time and in full you will gain more control over your finances, and that will make it easier to adopt good financial habits.
3. Reduce The Use Of Your Credit Card
One of the fastest and simplest way of The easiest and fastest way to eliminate credit card debt is to stop using your credit cards. Plan to pay in cash and you will automatically spend less. In fact, research has shown that consumers are willing to pay twice as much for an item when they are paying with a credit card as opposed to cash. If you are still using your credit cards as you are trying to pay off your debt, you will only sabotage your own efforts.
4.Negotiate better rates with your credit card company
One fast way to reduce debt and have a better financial standing with credit card bills is to negotiate a lower interest rate with your provider. Reducing by a percentage point or two can save you hundreds as you pay off your debt. A simple phone call and a polite request may be all it takes. While your credit score will play a large role in whether or not you get a rate cut, it’s not the only factor. “Every lender has their own approach to this issue,” says Weston. “It never hurts to give it a shot.”
5. Keep An Emergency Fund
One major reason people land themselves with huge credit card debts, is because life throws at them various unexpected expenses, which they pay using their Credit Card. Having an emergency fund will help in some ways cushion the effect of unexpected expenses like car repairs, medical expenses, sudden hike in price