DDuring the COVID-19 lockdown, financial difficulties became widespread, and managing credit card debt was a common challenge. I, too, have had difficulties managing my credit card debt, and am looking for advice on how to reduce the costs associated with borrowing on my credit cards. Also, are there common pitfalls to avoid in increasing credit card debt?
Name withheld on request
Credit card debt can be a difficult proposition for those who choose to pay only the minimum amount due on the card, leading to slow amortization of their purchase amount. As rational human beings who control their monthly expenses in line with their earnings, we should seek early repayment, thus expediting the amortization of the loan. Even if you are unable to settle the payment in one go, it is still advisable to make the maximum possible payment to ensure that the principal balance of the purchase is reducing and the loan time period I do not remain stable.
One should endeavor to pay the full amount of the bill within the interest free credit period. Also, if cash flow does not permit outright purchase, high-ticket purchases should be bought on EMIs, or Equated Monthly Installments.
Shailendra Singh is the Managing Director and Chief Executive Officer of BOB Financial Solutions Limited.
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