Saturday, April 9, 2011

How To Get Rid Of Credit Card Debts

The first modern credit card, ‘The Diner’s Club’ card came out in the 1950s and was developed to help customers out, enabling them to carry just one card to pay at different stores. Now, with the passage of time people have come to rely on credit cards namely for two basic reasons, because it is easier and safer to carry than cash or simply to buy something that they cannot afford yet. The ones in the latter category are more likely to fall into credit card debt than the former. In developed countries and major cities in developing countries, credit card debt has become a considerable factor in increasing stress related health problems. The spending power that is offered with a credit card is almost addictive; it has people under its spell right from the first “swipe”. A person is more likely to buy a product that is not a necessity with a credit card than with cash in his/her hand as he/she is less likely to feel ‘the pinch’ while swiping his credit card. Even though credit card bills can be paid off in installments, the interest rates squeeze out lot more than the person would have originally thought of spending on a particular product or occasion. Paying off credit card bills might look like an easy task at first, though it’ll seem to be an almost impossible ordeal to most users. A few simple steps that can be taken to reverse your debt status can be observed below:
 
Getting Rid Of Credit Card Debts 
  • Do not keep credit cards in handy places like your wallet and carry just one card with a smaller limit, for emergencies. It is the key to avoid temptation.(A joke doing the rounds in credit card circles portraying a man who refuses to report a stolen credit card because the thief was spending lesser than his wife, paints a clear image of husbands with shopaholic wives or vice-versa.)         
  • Do not use new credit cards to pay off bills on an older credit card. That would be a recipe for disaster; you might end up paying more interest than you originally would have.
  • Start paying with cash rather than “swiping”. Besides, handing over bank notes has always been swankier than handing over a card.
  • Create a new budget, keeping in mind all the debts that have been incurred to date, scrimping on daily expenditures and avoid splurging money on unnecessary items. Cut down on household bills, electricity, telephone, fuel, etc.
  • Try to prioritize your monthly credit card payments according to interest rates, speed up the payments on the ones with higher interest rates.
  • Try to reduce “eating out” and cook a meal at home, give up on a few luxuries like going to the movies, drinking at pubs, fancy restaurants, at least till you can afford it without paying with ‘plastic’.
  • Invest in a pair of scissors and start slicing up those credit cards once you’re done with the payments and keep just one in your wallet for emergencies. 
Credit cards were seen as a necessary evil for a considerable amount of time. However, it could actually help people out in dire situations if used responsibly; maybe they should in the near future issue statutory warnings with credit cards that scream ‘swipe responsibly’.

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