Every product has its own pros and cons and credit cards are no exception. Owning a credit card can be good or bad. It entirely depends on person to person and how they manage it. It has its own merits and perks. But when misused, it can lead to a big load of financial problems and stress. People don’t think when they spend on dining, travelling and shopping by credit cards. However, when it is about repaying, many people find it difficult to repay the entire amount and keeps circling the drain of debt. Therefore, to avoid such problems, it is important for a user to understand the correct way of using it.
Where does It All Begin?
Using a credit is easy. Just pick a product of your choice, swipe your card and voila! You have your desired product in your hand. It all seems so convenient and easy. But, what people don’t understand before swiping is that, if they have enough money to repay it. This is a question that needs to be asked before making any purchase, but most of ignoring it gracefully. As a result, we end up in a huge amount of debt.
Any purchases made on the card needs to be paid back because they carry a huge amount of interest. Experts say that people don’t often check their credit card statements at the end of the month to know the amount they owe to the credit card company and keep using it blatantly. This is the first sign of misuse and then it keeps adding. Moreover we are so obsessed with reward points which card gives us like for example IDBI Bank Credit cards for travelling gives reward points on spending by which we get attracted and start over spending.
Without a doubt, credit cards are convenient and rewarding, especially in the time of emergencies. They are also secure and instant access to cash. However, spending unknowingly can lead to many financial troubles. So, before you find yourself trapped in the mess, it is better to read and see if you have any warning signs.
Sign #1: Unable to Pay the Full Amount Due Every Month
We keep swiping our credit cards without even realizing if we have enough money or any prospects to receive it in future to pay for the purchases we made. We keep shopping until we receive our statements and look at the amount and realize, you cannot pay in full. If you are facing this trouble every month, then definitely you are misusing a credit card.
Your credit card statement with a huge amount of debt is the first warning signal stating that you are overspending than your repaying capacity. Unable to deal with credit card debt immediately can lead to a financial crisis in the future. Therefore, the key is to find a solution to pay your overdue without a delay.
Sign #2 Paying Minimum Payments Monthly
Users often feel that paying the minimum amount due every month will clear the debt slowly and steadily. This is a sure and a big sign that you have misused your card.
Credit card companies are smart and they keep looking for such victims to fall into this trap. Why do you think these companies offer such low minimum amounts? Because they know that people find it easy to pay lower amounts than paying it fully. In reality, you are only paying for the interest amount every month and your principal is still where it was. Don’t let the companies let you fall into their high-interest trap. Make higher payments every month to clear the dues as soon as possible.
Sign #3 Buying Things that you don’t Need
Humans are greedy in nature, especially if they have the power of credit card in their hands. They feel that they can buy anything anytime. This is true to some extent, but when you are not able to repay in full, that is when the problem arises. It is time to look at your purchases and ask yourself, whether you are really buying something out of necessity or convenience. If you see your answer is moving towards convenience, you are surely abusing it.
You may like to Read: 10 Mistakes Which Every Credit Card User Must Avoid
Sign #4 having Sleepless Nights because of the Debt
Credit card debts work like a thermometer. The higher the debts, the higher is the stress and higher are the chances of health hazards. Stress comes easily with debt. The issues that used be a day in a month are now constantly nagging you. You are having sleepless nights thinking ways to repay it. If you are into any of these situations, you have definitely misused it.
Sign #5 Unable to Make any Savings
We all know saving some part of your income every month is really important. Imagine that every month the amount you used to save is going in credit card debt and you are unable to make any savings for the future. It is not a very happy picture. Savings are important and should be done without any second thoughts. But if you are not able to save because you have to make minimum payments or pay your long overdue, you should realize that you have done a mistake.
Sign #6 feeling Guilty when Making a Purchase
This is the worst you could do to yourself. You had a credit card so that you could make your dream purchases without having these emotions and now just because you made some unnecessary purchases earlier that are now haunting you in form of debt, clearly indicate your spending behavior. Feeling guilty every time you shop something is a sign that you have used your credit card without checking your budget, but you are doing it anyway.
To sum it up, these signs clearly show that you have overspent on your card and now you are facing a debt crisis. But this is not the end of the road. Managing your debt is the first step that you can take towards controlling your financials. Realizing your mistake early is good, but not acting upon it can actually lead you into troubles. So, the moment you realize that you have excessively spent, you must immediately take steps to turn your situations around.