Credit card debt is probably the most common debt problem people face. It is easy to get trapped in credit card debt. It doesn’t take much to get a credit card.

Credit cards are convenient and make it easy for us to buy things we can’t afford. But all we are doing is deferring the cost. Time of reckoning comes when we get our credit card statements. If you are in a situation where you are unable to pay off the full balance, you will be looking at high-interest charges. Interest charges can make it difficult to pay off the debt month after month, locking us in a vicious cycle of credit card debt.

There are two reasons why this may happen. The first reason is simple that you may not understand all the fees and charges attached to your credit card. This is simply carelessness on our part. It is important to fully understand the terms and conditions attached to any loan you take and credit card debt is no different. The second and probably the most common is to fall into the minimum payment trap.

Credit Card Fees

Every time you get a new credit card, you are sure to get a thick booklet with fine print. Do not ignore this information, you don’t read every word if you don’t have the time but at least go through the main points.

Here are a few important credit card conditions to note:

Interest Rates: You should always know the interest rate you are paying on your balance. This can be a massive cost if you consistently find yourself in a situation where you are unable to pay the balance in full.

Grace Period: This is basically the time you get to pay back the money without incurring an interest charge. Be mindful of this period especially if you are carrying a balance. As soon as your purchase crosses the grace period, it starts incurring interest.

Cash Advance: Taking a cash advance from your credit card is one of the worst mistakes you can make when it comes to credit cards. First of all, there is no grace period when you take out a credit card cash advance. On top of that, you will have to pay a transaction fee. So a cash advance should only be used in emergencies.

Over limit charges: Going over the credit limit can have consequences, there is usually an over the limit charge plus it can impact your credit score.

Minimum Payment

A lot of people look at their statements and pay the minimum required. This is a huge mistake. By only paying the minimum you actually end up paying more for your purchases due to the interest charged on your balance. Next time you are thinking about making a minimum payment, look at your statement it will tell you how long it will take you to pay off the balance by making minimum payments. It will shock you.

To avoid paying outrageous interest charges every month, always pay the full balance and if you can’t then pay more than the required minimum.

Balance Transfer

I am not a big fan of this method but it could help if you are struggling with credit card debt. If you are paying interest on your balance every month, then transfer the balance from the card with high-interest rate to a lower rate card. The reason I don’t always recommend this method is that there is usually a balance transfer fee. So before taking this approach have a look at the balance transfer fee and decide if it is worth. If you are struggling with managing credit card debt, then this approach may help.




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