5 mistakes to avoid when paying off credit card debt

5 mistakes to avoid when paying off credit card debt

Paying off credit card debt can be a tedious and lengthy process. However, with proper planning, you can reduce your debt to a substantially low amount. Failure to pay credit card bills on time can jeopardize your financial well-being, which must be addressed and corrected as soon as possible. As debt accumulates, so does the stress. Here are some of the mistakes that are commonly made while paying off debt that can easily be avoided.

Continuing to use the credit card
It is crucial to refrain from using a credit card that has a significant amount of debt until the entire debt has been paid off. Though you may be able to make your monthly payments and reduce the amount of debt over time, the interest charges will continue to compound and accumulate each month, resulting in a much larger debt than you initially incurred. To put an end to this cycle, it is necessary to stop using the credit card completely, at least until all the outstanding dues have been cleared. Also, do not fall prey to “buy now, pay later” shopping schemes.

Lack of planning
Having a well-planned strategy is the only way to get out of debt easily. Failing to schedule timely payments and ignoring accrued interest on time will only lead to increased debt over time. Therefore, set a target and break it down into short-term objectives to achieve the desired financial outcome.

Ignoring the root cause
Analyze the reason behind your current financial situation and identify what led you to overspend. Overspending is a hugely common problem, especially for those who rely heavily on credit cards for their purchases. If you do not plan your expenses, it becomes difficult to manage your bills and pay them on time. Therefore, identify the root cause of your debt and work on a budget to improve your financial management in the future.

Having a BNPL mindset
“Buy Now and Pay Later” is a payment option that allows you to shop or purchase items in real-time and pay for them later in installments. While this may seem like a convenient option, it can quickly result in added debt and increased interest on your credit card bill. The interest charge will only multiply with every added item on the card.

Paying less than the minimum due
Even if you cannot pay the full amount, it is important to pay at least the minimum due. This helps keep the interest at a manageable level and allows you to calculate a timeline for repaying the debt.