5 steps to avoid credit card debt and maximize returns
By Ankit Sharma
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4. Avoid cash advances
Yes, credit cards provide easy and anytime money but they are not a replacement for personal loans. Small amounts are blatantly withdrawn by credit card holders as they find it relatively convenient as compared to applying and getting a personal loans. However, there are many drawbacks of taking out cash advances. Cash advances attract interest rates around 30% to 40%, which is double as compared to personal loans, which come at interest rates below 20%. In addition to this high interest rate, cash advances with credit card has a fees associated with it. Called the cash advance fees, it is usually a percentage of the cash withdrawn with no upper limit. One more thing that makes cash advance costlier is that the interest is levied on the amount withdrawn from day one itself. So even if you pay your credit card statement in time, any cash advances during the month have already cost you interest for that particular month. Cash advances are one of the most disastrous things to do with credit cards and unless absolutely essential it shouldn't be done.

5. Limit the number of credit cards
We often see people with a purse full of credit cards, but are they really necessary? Too many credit cards mean too many credit card bills to repay every month, too many due dates to remember and with the modern busy lives, forgetting any repayment is very easy. Then there are other security concerns, which come with having too many credit cards in your wallet. And once the US like credit rating sets in, too many credit cards will reduce your credit worthiness for additional credit.

Other things like reading the terms and conditions carefully before using the credit card and restraining yourself from being lured from the freebies also help. Credit card debt basically is caused by over spending on your credit card, which can't be repaid fully with the monthly bill. The good old saying 'borrow only what you can repay' is the mantra that should be  followed with credit cards. Staying well within your budget will go a long way in keeping credit card debt at bay.

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(Comments Posted : 6) Post Your Comments
1. good site ... gives lot of inormation...


Sajith Kumar
Sajith Kumar (Posted: Nov 10, 2008)
2. Very Good Article..

Very nice site.. I am gonna recommend this site to my friend and relatives..

It has got very useful information.

Leela (Posted: Sep 28, 2008)
3. I had paid max. amount to my Credit card and my principle really stands as it is. Personal loan from the same bank could not be available inspite of my approach to clear the card amount. Inspite of adding more interest and late fee etc. and bank itself freeze my card how can pay
GV JAYARAM (Posted: Sep 6, 2008)
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