Not spending more than we can pay is a precondition for us to use our credit cards correctly and responsibly. Although we originally used it only for certain costs, we may lose your control from time to time.
Considering that economy and money play a bigger and more vital role in our daily lives than ever, we can easily infer that we need to be much more careful about borrowing.
So what should we do to avoid the over-borrowing credit cards and paying extra credit card interest? By paying attention to these basic tips, you can prevent excessive debt to the cards and strengthen your financial habits.
1. Apply Widespread Debt Limit
Experts recommend that monthly total debt payments should not exceed 30% of total monthly income. By calculating your salary and total monthly debts, you can take care that your total debt payments do not exceed this percentage. In this way, you can spend as much as you can pay and avoid excessive borrowing.
2. Know Latency Costs
Note that you have to pay interest due to late payments to your credit card. If you delay your credit card total term debt, interest is charged on your total term debt. You may consider depositing the minimum payment amount. However, the minimum payment amount only prevents your credit rating from falling and you pay the overdue interest, that is, the shopping interest continues to be applied to your remaining balance. On the other hand, depositing the minimum payment can also cause you to enter an irreversible debt cycle.
3. Make Your Plan for Your Purchases
When it comes to using your credit card, it’s always best to plan. If you plan to make some purchases in the near future, you may consider dividing them into months so as not to exceed 30% of your total monthly income. It is always a good choice to plan and do your shopping in financially more comfortable months rather than under your debt burden.
4. Set Your Card Limit Yourself
Sometimes we have a chance to make a choice but in most cases the credit card limit is determined by the banks. It is definitely not a good idea to lower the credit card limit to control spending, but you might consider setting a spending limit yourself. Taking into account your monthly income and debt payments, you can set a spending limit in the amount you want, provided that it does not exceed the 30% limit. For example, you can say, “I will spend no more than 800 TL on my credit card every month.”
You can use each of these tips to avoid over-borrowing credit cards or to strengthen your financial habits.