When a person gets his or her first plastic card, the freedom and joy that accompanies this are immeasurable. But with this sort of financial freedom also there will be a major responsibility on the individual to handle and also smartly manage usage of the card. Misuse and abuse of the card is something that most beginners are prone to.
It is easy to fall prey to indiscriminate spending and thus landing in a debt trap. There are a few important tips that any first-time credit card user should consider, ensuring that their world is not turned upside down inadvertently.
Have a strict budget: When credit is so easily available, overspending is very likely. Financial planning can be damaged as a result of this as a person will end up spending more than is affordable, just because upfront payment is not asked for.
As a first-time credit card user it is important that individuals create a strict budget and make sure that they stick to it. Registering a mobile number with the company will give updates of usage and also the balance credit limit.
Do not opt to increase credit Limit: If a user actively uses a credit card and makes payments on time, the company will probably want to raise the credit limit from what it was. While this allows a person to spend on more expensive items, it is a sure shot lure for falling into a debt trap. Surely it is something to be avoided unless there is an increase in annual salary.
Make cash advance your last resort: A cash advance is a feature that will attract an interest rate of about 30% per annum. This interest rate will be calculated from the moment that the money is taken and will be compounded until when the entire amount is paid off. If there is a missed payment, the user will incur huge interest payments. Users should resort to a cash advance only in an emergency and usage should be carefully carried out. Getting that first plastic card is a sign of financial progress but things can go very wrong if these crucial points are not considered seriously.
What Should Consider before buying Christmas presents?
Christmas is in the wings and it is super tempting to go beyond just emptying your pockets. If you do not want to feel broke in January then these useful tips must be strictly followed:
Affordability should be your motto and not desirability: Always plan to pick up gifts that you can afford and not what you would love to give out. This will help you save and not splurge beyond your means. Never go in for something that you lust for as, later on, you end up wondering how to pay for it. What you should do is calculate a budget and then go about sticking to it.
Do not gift everybody: While gifting immediate family and friends is fine, your ever-expanding social and work circle doesn’t have to be given any. Do not feel obliged to give just about everybody. Maybe you can create a no present necessary pact or place a cap of a certain amount on gifts so that you needn’t worry over return gifts.
Avoid department stores: There are a lot of stores online that offer lots of products online for a fraction lesser than the high street. If you were to pick up something in bulk you end up paying further less.
Charity is always good: When you are low on money and would still like to do something special for someone or some people, giving to charity could be the solution. You can give a few pounds, offer food, livestock, water, just about anything as every little bit counts.
Wait it out till January: The pre-Christmas period and the period during it is the most expensive time to go shopping. So what you can do is offer IOU to the people you want to gift and mention that you will be gifting in early January.
Strictly avoid brands: While it is nice to pick up branded items, these are much costly than their unlabeled compatriots. If a brand does not have too much of an impact on the product, it is best avoided.
Supermarkets as alternatives: There are several supermarkets out there which you can visit and pick up mass gifts from. These are as good as the online stores in terms of price.
Most children are not retail snobs: Growing up, most children do not place a value on any gift received, based on the price tag.
What should do? When you are Incapable to Pay Your Bill.
When you have money issues, running away from them, is never the solution. Suppose you are finding it very difficult to pay off the bills in a particular month, what do you do? There are a few things that you can do, take up responsibility for this situation that you have created and then correct it right away. By taking care of the situation you will be able to avoid any problems with your credit score.
Get rid of everything and anything that you do not need. You should make a list of all the expenses that you incur and then do away with anything without which you are still able to survive. If there are excess cable channels, streaming services, magazine and newspaper subscriptions, additional phones or even memberships that are paid for, you can think some or all of them.
Try and earn some more money by doing some part-time jobs in your free time or by selling off your old stuff. Whether you pay some bills late or skip a payment, your credit score is going to take a hit. So you can apply for short duration jobs nearby that you can work on during your free time.You can even think of disposing of household stuff that you no longer have any use for. There is always someone out there looking for what you do not need. This way you will have a little extra to take care of your expenses.
Try and renegotiate your loans and also medical bills. If there are any loans that you are paying off you can try and renegotiate new terms for repayment and thus get some amount reduced. Medical bills can easily be renegotiated with the accounting office. You can inform the concerned person how much you can actually afford to pay and more often than not, they will work with you to help you out.
Despite this, if you are still having difficulty then do your best to prioritize your bills. Go through the list of expenses and see those that are vital to your existence and clear them off. Any secured debt can fall next, these include car or home-equity loans and others. Unsecured Mark all unsecured debts as your last priority.
Please do not shy away from talking to those whom you owe money. Call the people that you owe money before it is due and explain the situation that you are in. It is never going to be easy to do it but at least it will help keep you out of trouble. You can land an extended payment period, reduced payments or waived off fees.