Credit card – Basic need or a hard to afford luxury?

Everyone has at least one credit card nowadays. People find it easier to move with a piece of plastic in their pocket rather than a wad of cash in their wallets. The other main reason is that people like having the power to buy anything and pay for it later. It pains the consumer to part with physical money to buy various products and services. The more pain they feel while spending, the less they spend. The credit card has a transparency effect, so people can’t really see how much they are paying and as a result, they are more likely to spend using a credit card. However, most people forget about credit card debt and the interest they have to pay for it every month. No matter how much they try being free from credit card debt, it seems impossible. It can be hard to pay back excessive credit card debt since if you had that amount of cash in your account, you wouldn’t actually be in debt. It may seem daunting at first, but with a good payoff plan, you may be debt-free sooner than you think.

Know your plastic

Before getting off the debt, you first must know how your credit card debt works. You’ll receive a bill or credit card statement at the end of every month. This statement will include how and where you used the particular credit card. Depending on your bank, you will usually have between 15 to 25 days to pay your bill. If you pay the whole balance, good; you will have to pay no interest and you’ll be debt free at least for that month.

However, if you don’t have enough amount to pay the whole bill, there is usually a minimum amount that can be paid. Paying this amount means that the bank will add the rest of the amount in the next month’s bill with interest but will not block your credit card. It’s better to pay the whole amount every month as the interest on credit card debt is often more than the actual debt.

The faster, the better

Credit card interest may be higher than other loans, but it still varies from bank to bank. If you have credits cards of various banks, pay the bills in order of their interest rates going from greatest to smallest. Another way is to use your savings or liquidate some of your assets to pay off the loan if not whole, then at least some part of it. If you don’t even have money to pay off the minimum amount, you can call your credit card and negotiate a repayment plan. Even though the company legally has the right to take the minimum payment, it might negotiate a credit card debt consolidation plan that suits both parties.

If all these ways fail, there is always budgeting. Track your money and see where you can make cuts to save more money. Eventually, you’ll be a free debt-free human again.