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Make credit cards an asset not a liability

Last Updated Date - Mar 21, 2023

In this article, know everything about credit cards and how to make it an asset.

Credit cards can be a lifesaver or a harbinger of bad news. Now it is up to you to choose the path you want. Credit card debt traps are very easy to fall into.

You can blame the credit card facilities for it because they are “too enticing” but in actuality, the user can choose to not fall into such a trap.

Wondering how to avoid such credit card debt traps? Surprisingly, if looked closely, you can assess the onset of the credit debt by checking their spending habits and credit card history.

Even if the credit card company may not provide the facility of warning levels, you can use certain signs that indicate that the user may be walking towards debt than away from it.

Credit Cards

Signs that Indicate a Possible Debt Trap

Know the methods which are possibly indicating that the way you are using your credit card might lead to a future debt or liability.

Easily overused

It’s a basic human mentality to spend at a higher rate if they have some financial cushioning. In this situation having a credit card along with a bank account provides a sense of financial cushioning which will lead to people spending more using their credit cards.

But here what you need to think about is if you are capable enough to make the credit card payments next month. If the answer is even a slight no, then you are pushing yourself into a debt trap.

Paying only the minimum amount due

They have a scenario where they allow the users to pay only a minimum amount if they cannot pay too high of an amount.

However, it may seem like a convenient option, but in reality, the lesser you pay, the more debt gets piled up because the bank charges an interest rate between 35%-40% on the due amount. And this leads to financial liability.

High-Interest Rates

If you have not checked the schemes of the bank with whom you have your credit card then that can be another problem because a different bank has different interest rates.

So, without checking if you have a credit card for which the bank charges 35% interest on the due amount then it will not take much time before the debt has piled up too high.

Now, say, for example, you have found yourself in this debt situation, then use the below-mentioned points to solve it.

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    Three Solutions to Help Lessen the Debt Burden

    Credit card debt also impacts the credit score negatively. So, before the situation goes out of hand and the credit debt becomes a huge liability, use these solutions to eradicate or at least lessen that liability.

    Transfer the credit balance to another provider

    Yes, it is possible to transfer the credit balance of one credit to another credit card provider. So, what you can do is use this facility to transfer the balance to a different provider who charges less interest rate.

    This way you will have less interest rate burden.  But before making the transfer, duly check all the charges concerning the new credit card provider.

    Convert balance into EMIs

    Another way to lessen the burden is by converting the credit card balance into EMIs. Many providers offer this facility on the pending dues.

    This way, you can avoid paying a big sum of money, and instead pay a small portion of the due over an extended period.

    The banks will charge a fee in terms of an interest rate for this conversion. But the good thing is that this interest rate is way lower than the usual charges on the unpaid due as a whole.

    Take a personal loan

    This option may seem financially burdening but is a financially clever move. For people who have a big credit debt, this option is quite helpful.

    So basically, try taking a personal loan at a cheaper interest rate to completely pay off the credit dues. Instead of paying a 40% interest rate on the credit card due, it is way more financially responsible to instead pay 11% on a personal loan.

    Yes, but you need to be eligible for the loan as well as duly pay the EMIs regularly. But the silver lining is the lowered interest rate.

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    Better Planning to Turn a Liability into an Asset

    Now that you are out of the woods called credit card debt trap, start planning to use the credit cards to your advantage without hitting the bumper of debt. There are two beneficial parts of credit cards, credit score, and reward points.

    Credit Score

    Credit score is the points system that determines how creditworthy you are. The scale is between 0 to 850, and if you can keep your score somewhere in the range of 650 and above, you have a good credit score.

    Now the thing is that it is not easy to increase this score but the best option one has is by paying credit card dues. They are easily able to raise your credit scores and make you liable for different loans and changing interest rates and credit card limits.

    Reward Points

    Using your credit card will also earn you reward points. These points work like any other reward system. The earner points bring you coupons, discounts, and vouchers on your shopping, dining, traveling, and utility bill payments.

    The trick here is to use these cards numerous times for smaller payments. This way your debt will not go up and you will still be able to earn credit card reward points. This becomes a win-win situation.


    You are entirely free to keep a credit card as an asset or a burden.  It’s wise to use your credit card responsibly, for the correct things, and with enough assurance to pay it all back.

    Getting a credit card with no annual debt is the ideal method to utilize one. Put the majority of your spending on your credit card, but only if you have the funds to cover them and earn a whole lot of reward points.

    The most crucial rule is to always pay the whole amount owed, never the minimal amount required or a portion thereof.

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