What you Need to Know about Paying your Credit Card bills and Loans


With the massive amount of choice in goods, services, subscriptions, and so on, it is not surprising that people want to get a credit card to finance several purchases. However, you need to keep in mind that managing your credit card account and taking loans is no joke. Credit cards are fantastic if you know how to use them. However, get it wrong, and you will find yourself in a lot of debt.

How do you choose the right credit card?

This is a very important question. Before you get carried away and apply for a credit card, you need to know what you want in a credit card before you get one. In other words, what should you look for in a credit card? Here are some primary factors to take into account:

Credit limit

Credit limit refers to the amount your credit lender is willing to let you borrow. How much they let you borrow primarily depends on your credit history. If you have an excellent credit profile, your chances of getting a high credit limit are sky-high. On the flip side, maintaining a poor credit profile hampers your chances of getting a reasonably high credit limit.

Check your credit score

This brings us to your credit score. Your credit score is instrumental in getting you great deals on credit cards with great benefits. Your credit score is a three-digit number ranging between 300-850 and demonstrates your creditworthiness. If you have a score of 700 or higher, you can expect to land most credit cards with a variety of benefits.

You will have to check your credit score to find out where you stand. However, keep in mind that you may be charged to run a credit check. Be sure to go for free options.

Interest rate

Here’s another factor you need to take into account – Interest rate or Annual Percentage Rate (APR). Interest rates can be fixed or variable. Credit cards with fixed interest-rates allow you to plan your expenses effectively because you know how much money you have to set aside for your credit card bill payment. Credit cards with variable interest rates, as you may have guessed, can change their interest rates every month.

Also, cards with fixed interest rates can change for certain reasons, including, late payment of bills, exceeding credit limit, and so on. The credit card lender can change the interest rate if they want to. However, they have to notify you.

Before you choose a credit card, you need to find out how much finance charge is calculated. One of the more common methods is the average daily balance, in which case, the daily balances are added and divided by the number of days in the billing cycle.

Fees and penalties

When you look for a credit card, you need to take fees and penalties into account. Common charges you may be liable to pay are transaction fees, fees to increase your credit limit, late fees, and so on. Find out how much you will have to pay and zero-in on your credit cards accordingly. On the whole, you want credit cards with reasonable fees.

For balance transfers, you should look for offers with no transaction fees and no interest for at least 12 months. Also, do not pay extra for reward programs.

What should you do to avoid credit card debt?

Credit cards can be a nightmare if you do not know how to handle them. Here are a few things to keep in mind to stay out of debt:

Live within your means

Sticking to what you can afford is one of the most critical pieces of advice anyone financial expert will tell you. As obvious as it sounds, most people tend to get carried away and splurge on a variety of things, only to find that they have tons of debt they have to clear. By living within your means, you can save yourself from a world of financial trouble.

Keep your card to yourself

Avoid lending your credit card to your friends or anyone else. While it may seem like a harmless thing to do, you are responsible for all the transactions on the credit card at the end of the day. If you exceed your limit and have to pay high transaction fees, and so on, you will find yourself in debt and compromise your credit score.

Avoid balance transfers unless required

Transferring a balance from a high-interest rate credit card to one with a lower-interest-rate may seem like a smart move. However, if you do this repeatedly, you may have to pay a higher balance overall once the fee is levied.

Do not take out cash advances

With a credit card comes the temptation to take out a cash advance. However, you should keep in mind that you have to pay a high transaction fee and interest. Also, you do not have a grace period to shield you from these charges. In other words, avoid taking out a cash advance.

How to repay your loans effectively?

Now that you have a decent idea about credit cards, let us talk about how to repay your loan. Applying for a loan may seem like a short-cut method for making purchases. While that is true, keep in mind that you will have to pay interest. If you cannot manage your loans properly, you will find yourself in hot waters. Here are a few things you can do to repay your loans quickly:

Make extra payments when possible

Want to take care of your loans early? Make more payments. The idea is to chip away at the principal amount. The more payments you make, the faster your principal amount goes away. Making extra payments is one of the most effective and obvious ways to repay your loans early. The cherry on top is that you reduce your chances of having to pay extra fees.

Use your savings

Have an outstanding loan? Turn to your savings account for the answer. You may have to dip into your savings to clear a sizable chunk of your loan amount. If you can afford to use your savings, do not hesitate. Keep in mind that taking care of loans with the highest interest rates is the best way to clear your debt.

Consider making a Down Payment exceeding 20%

Making a down payment to reduce your principal amount to be paid right off the bat is an excellent idea. In other words, your debt is significantly lower. Consequently, you do not have to spend too much money paying interest on the entire principal amount. Depending on your financial situation, consider making a 20% or 30% down payment.


As you can see, handling credit cards and loans is no easy feat. As mentioned earlier, if you navigate your finances well, you should have no problem making the best of the credit and loan options you have. However, if you make fundamental mistakes, you will have no choice but to crawl out of a difficult financial situation.


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