Saddled by credit card debt? Three tips to help you deal with it

Highlights

• There are times in life when you might run short of cash to meet your basic needs such as food and utilities.
• In such situations, your credit card comes handy.
• Such a situation generally arises due to job loss or pay cut during economic recession.

Life is uncertain and it might throw your way unexpected circumstances. There might come a time when you run short of cash to meet your basic needs such as food and utilities. Such a situation generally arises due to job loss or pay cut during economic recession.

And in such situations, a credit card can come to your rescue.

As a result of the ongoing coronavirus pandemic, many people have found themselves caught in the credit card debt trap in the recent past. Many have not been able to fully return to work. In addition, rising inflation has further hit the common man.

In case you are currently sitting on a credit card debt pile, here are three ways you can employ to get rid of it by as soon as end of the year.

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Time to tighten the purse strings and follow a strict budget

Experts always advise to follow a monthly budget to avoid falling in the debt trap. But, if you have already landed in debt, then you need to tighten the purse strings as soon as possible. This way you are less likely to overspend and also save enough to repay your loans in a timely manner.

It is also high time to find a room to cut back on your spending such as doing away with your monthly club membership and many other expenses that could be slashed in that particular situation.

Heard of money envelope system?

Money envelope system is an age-old strategy to allocate physical cash to each of your monthly budget items. It helps individuals who lack discipline, to limit themselves inside the stipulated budget. The idea includes preparing envelopes with each of your expenses at the start of the month and judiciously using the allocated money towards specific requirements.

Once the money is spent, it’s gone forever. Thus, you will always have to think before spending the funds allocated to one envelope for a different expense.

Extra monthly payment

Borrowers are generally in the habit of monthly billing cycles. However, there is no such requirement to wait to pay until payment due date. In addition, you aren’t restricted to make just one payment every month.

Credit card interest is compounded daily. The finance charges accrued are based on the account’s average daily balance.

You can make two payments a month in case you are paid every two weeks or bimonthly. if you’re paid more often — you can do the same more regularly.

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