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How to avoid a debt trap
April 18, 2008
Never pay for daily requirements with credit cards. Once you get addicted, it is very difficult to get out of the credit trap.
Try to pay off the entire amount of outstanding dues within the last date. If you carry forward the dues, by just paying the minimum amount you end up paying a lot more in the long run. Banks charge the highest interest rates for personal loans and credit card dues.
Use credit cards only when you really think you should. Otherwise you end up spending money unnecessarily. Stay within 30% of your credit limit.
Set aside credit cards for a month and see how much money you can save. Resist the temptation to shop just to makeyourself happy. There may be many things you don’t need to spend on right now.
Never spend more than what you can afford to. Try to save atleast 10 per cent of your take home salary.
Image: Be very careful while using credit cards -- A window sticker advertising Visa and MasterCard credit cards. | Photograph: Justin Sullivan/Getty Images
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