During the covid-19 lockdown, financial hardships became widespread, and managing credit card debt was a common challenge. I, too, encountered difficulties in managing my credit card debt, and I’m searching for advice on how to reduce the expenses associated with borrowing on my credit card. Also, are there common pitfalls to avoid that lead to increased credit card debt?
—Name withheld on request
Credit card debt can be a daunting proposition for those who just choose to pay only the minimum amounts due on the card, thereby opting for a slow amortization of their purchase amounts. As rational human beings who control their monthly expenses in line with their earnings, we must look for quicker repayment, thus accelerating the amortization of the debt. Even if you are unable to settle the payment in one go, it’s yet advisable to make the maximum payment possible in order to ensure that the principal balance of the purchase is being reduced and the debt does not remain static over a period of time.
One must try to pay the bill amount in full within the interest-free credit period. At the same time, high ticket purchases should preferably be bought on EMIs, or equated monthly instalments, if the cash flows do not permit an outright purchase.
Shailendra Singh is managing director and chief executive officer, BOB Financial Solutions Ltd.
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