Your personal quest for a solid financial future begins with freeing yourself from debt, since debt undermines your ability to build a financial foundation to accumulate wealth. Unless you can manage debt, you will find it difficult to save, invest or achieve financial freedom.
Sometimes individuals have been forced to take what is considered to be good debts, such as a home mortgage, business, and a college education loan, a reasonable loan, or funds to handle an emergency. These kinds of good loans are for the advantage of the individuals. Otherwise, you must avoid debts or pay off the loans you owe.
Below Are Steps On How to Avoid Or Reduce Debt:
- Make sure you have an emergency fund
- Apply a budget strategy to track and reduce your expenses
- Avoid obtaining more debt
- Pay your bills in full and on time
- Pay off your high-interest debts first
- Look for the best interest rates when consolidating your debts
Unnecessary Spending
Debt also can be a charge card, debit card, or credit card. People should avoid all kinds of debts, including additional charges, debt, or credit cards. These cards can be a reliabilities, in which you spend your hard-earned money. For instance, with charge cards, you have to pay off the entire balance each month, while convenient debit cards deduct funds directly from your checking account.
You must avoid using or at less reduce the number of credit cards you have, since having lots of cards in the first place looks bad on your credit report. Even if you are not using all of them now, credit agencies know you could run up a lot of debt quickly.
The terms and interest rates on credit cards vary widely. If you have to own a credit card, you must compare the interest on the credit cards before you select a card. For instance, look for the lowest interest rate possible. Preferably, get a card with interest that is based on your average daily balance, including new purchases.
As an alternative, some card companies use a two-cycle average daily balance, including new purchases. This system charges interest on your average daily balance over two months. You must avoid cards with this kind of approach.
With good credit, you should be able to get a card with an interest rate of less than 10 percent. Take advantage of card companies’ promotional offers for low rates, and use low rate cards to pay off balances on higher interest rates. If you have outstanding balances on cards, pay off the higher interest rate cards first, and pay more than the minimum payment required each month.
Consider switching cards if a company raises your interest rate, uses a two-billing cycle method to calculate interest, shortens your grace period, or asks you for an annual fee.
How To Prevent Unauthorized Use Of Credit Card
Individuals must be cautious when using their credit cards to prevent fraud. Minor behavior, such as signing on the back of your credit card to protect yourself from unauthorized use, can prevent fraud. Also, you must buy online only from secured and well-known Web sites.
When applying for a credit card, you must check your statements for unfamiliar or unauthorized charges. To monitor your credit status, regularly obtain your credit report from a credit bureau. Under some circumstances, such as having been rejected for credit recently due to a credit bureau report, this is free. Otherwise, the charge can be up to 9 USD.
You must be aware that the three major United States credit bureaus are Experian in Orange, California; Trans Union in Chicago, Illinois and Equifax in Atlanta, Georgia. To dispute inaccuracies on your report, write to these companies.
Also, individuals, for small fees, can get a copy of their credit rating score, which credit card companies and lenders use to decide whether to give credit. The Fair Isaac Company FICO score issue a report derived by combining information about your checking and savings account balances and activity, outstanding debt, and payment records. Scores range from 350 to 900. You need 650 or higher to be approved for credit.
A FICO score is a three-digit number, typically on a 300-850 range, that tells lenders how likely a consumer is to repay borrowed money based on their credit history.
The following are steps on how to protect yourself from credit card unauthorised use:
- Keep the credit card in a safe place
- Monitor credit card transactions online
- Avoid paper trails of your credit card number
- Avoid allowing your credit card information to be public
- Immediate report any lost or stolen card
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