The thought of credit cards oftentimes makes people get nervous. Getting credit card rewards or the sign-up offers and bonuses can be enticing. The worrying part is getting entangled in debt accumulations and the interests that come with the debt.
How about the thought of a solid debt-proofing strategy? If you wish to get credit beyond what you can comfortably afford, then this is what you need. To prepare to debt-proofing your credit, there are three necessary steps you should follow to protect yourself from having your credit card debt and sending the debtor’s interest spiraling. Read these steps below.
1. Starting an emergency/precautionary fund
You can face unexpected situations, either twists or turns. Examples include having medical debt, your car being repaired, losing your job or just any other emergency that begs you to get a loan. It is recommended to create an emergency fund to tap into rather than having to rely on the high-interest credit cards to make up for the expenses that are unexpected.
Most people are shaken and discouraged by the guidelines that require one to have at least three-six months of living expenses. From the Consumer Financial Protection Bureau, even a little starter saving fund can be of benefit to you. For instance, having a saving fund of $450 is quite enough for coverage of common and fundamental emergencies like medical expenses or motor vehicle repair costs.
Emergency funds are always an ongoing gift, stress relieving and reassuring way because it gives you a feeling of not being dependent on somebody for the emergency bill payments. You should consider keeping your funds in a savings account, which will not require to pay monthly account maintenance fees.
2. Maintaining good credit to qualify for low-interest loans
It is rare to find all the expenses being covered by an emergency or precautionary fund. You should always have an option B just in case the first one does not go as expected. The plan B could involve you applying and use the 0% introductory credit card (APR). These cards can help you save some money on the interest charged for a reasonable duration of time. It will require you to have an excellent credit score that is 690 or even higher for you to qualify. Maintaining good credit will entail you being punctual and determined in making all the debt payment on time and only use up to 30% of their credit limits.
Having good credit gives a person a variety of options apart from having the time for a credit card application and waiting upon its arrival when you have an urgency to take care of.
3. When you notice your debt is growing, you need to act fast
It is wise for you to take action as soon as you come to know that the credit card interest is getting started in piling up. The quick steps that you can consider include cutting off extra expenses, having side jobs and getting another credit card (specifically the balance transfer card).
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