Steps to avoid credit card debt

It is difficult to find a person, who will say no to free credit if he understands the power of compounding. Credit cards provide you free credit for approximately 50 days. So everyone who uses it should be happy and enjoy the purchasing power. Quite often, however, we get to hear stories of people getting caught in the debt trap due to mismanagement of credit card.

Apart from the favour-able aspects such as free credit period, there are negative factors that need to be absorbed by the individual to enjoy a credit card responsibly. The first is the high rate of interest that is charged if you don’t pay the full outstanding after the 50-day grace period.

This period is very short. If you don’t repay the amount within this period, you have to pay interest in the range of 37 per cent. It’s very difficult to find any investment option which can fetch returns in the range to 37 per cent on a continuous basis. Now that you are aware of the flip side, let’s discuss some steps which you must take to avoid such a debt trap.

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