Brainstorm #5 : What is the best way get rid of credit card debt trap?

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Chennai Super Kings
looter143

So, I and many of my friends who have credit cards are in a debt trap. Moreover, we even realise that we’re in a juggling debt trap but yet do not do anything to get rid of it. (At least not a significant one)

It’s high time for me and for myself to either return my CC to the company after paying back all the bills or just stay in this financial trap forever.

I start thinking of bad days when CC helped me to save my ass and the benefits that it gave me till now & will give me in future as rewards on purchase of my or relatives shopping(FOMO).

The more I think of this financial issue I found myself in financial dilemma! 

Someone said it right if you have pain in your hand you won’t cut your hand, you can just fix it.

So, today, not just me but for all, write down what helped you in tackling this financial loop! 

I and many of you have read and watched so many YouTube videos and Google Blogs on this. So, please give some practical solutions

Time to doing some brainstorming!

A few psychological changes in me I’ve noticed are 

1. Impulse buying.

2. Buying out of budget things.

3. Buying not needed things.

4. Poor financial management ( I used to be a financial ninja before I got CC)

5. Buying for others just for rewards

6. I don’t wait for price drop, loot, sale, discount or bug to buy things, I just go and buy like how super rich does!

Challenge to me:- If there wouldn’t be any mind-blowing and significant brainstorming ideas from this thread, I’ll return the CC on 15 May ’22.

(It’s okay if you’re not going to post the idea but I request you to read all the ideas of different Dimers and upvote this post to encourage me to post more such amazing posts in future)

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23 Comments  |  
19 Dimers
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Deal Cadet Deal Cadet
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It’s is not a rocket science, just don’t fall in cashbacks, coupon or to fulfilling the target just rewards. Use credit cards when you really need, I mean genuine spends. If you over spends more than your income, can’t pay bill on time you will be definitely in debt trap & then blame credit cards for your current financial position. But actually you brought yourself in worst financial condition.

Deal Cadet Deal Cadet
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Set your spending limit % from your salary, it covers most part of it.

Budding Star Budding Star
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Dont have cc in first place
Peace

Deal Cadet Deal Cadet
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Imo by following a simple rule overspending can be stopped “don’t spend more than what you are earning” or in simple words if not in emergency than your total outstanding of all your cards shouldn’t be more than 50% of your income and it has so far worked for me

Deal Cadet Deal Cadet
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bhai shopping km kro, credit card bura ni h. Ab ghar m gas se fire show karoge to kbi aaj lagegi h, pr khaana easily bn jaata h, gas bura ni h 😄

don’t spend more than what you have in savings already. Don’t spend the whole credit limit because your card allows.

OR

keep doing it and keep funding the banks, so they give me better rewards for paying on times 😌

Community Angel Community Angel
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ismein brain storming ki kya zarurat hai block all credit cards and live peacefully

Deal Cadet Deal Cadet
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Just return all the paid cc and use only LTF.. since we pay fees then we try to get maximum benefit from it and we don’t think for consequences.. it also happens when u buy subscription for Zomato, swiggy or anything.. so just get LTF CC so it will help u when u need money and u Don’t feel bad when u miss out some benefit or rewards.. this is my thoughts about cc

Deal Subedar Deal Subedar
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Easy fund availability prompt to spend more or invest and most of us tend to fall on it. 

To overcome this trap, i think below are few TBD:

1. Take 1 loan/other source to pay all CC outstanding.

2. Reduce the number of card to 1-3.

3. Pay the loan in EMI and beware of spending on CC

Delhi Capitals Delhi Capitals
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Mufasa wrote:

It’s is not a rocket science, just don’t fall in cashbacks, coupon or to fulfilling the target just rewards. Use credit cards when you really need, I mean genuine spends. If you over spends more than your income, can’t pay bill on time you will be definitely in debt trap & then blame credit cards for your current financial position. But actually you brought yourself in worst financial condition.

the sole purpose of using credit car should be 

cashbacks, coupon discount

just pay in time;profit

Chennai Super Kings Chennai Super Kings
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demerius2020 wrote:

the sole purpose of using credit car should be 

cashbacks, coupon discount

just pay in time;profit

Yes true

Hotshot Hotshot
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till you are earning from credit cards keep them else throw them(not literally first close them) joy joy .
they aren’t emergency money cards!!!!!!

Deal Subedar Deal Subedar
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Firstly, its only a trap who doesn’t know all about CC.
CC is just like your salary, you eventually should never spend above your earning or you known (set my self) limits.
Secondly, always pay on Time. Thumbrule. Period.

I didn’t like this thought, before CC i was financial Ninja…..
Noone changes like this.

Anyway, if you go down this road. You can say next:
Why to study, when all dropouts are becoming Billionaires … Etc topics.

Rajasthan Royals Rajasthan Royals
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Delete FB/Insta from mob.

Social media FOMO affects our subconscious more than we can imagine. Stop socializing with friends/eating out till you are debt free within say next year. Later tell them you were in depression and could not go out. 

You will save considerable amount due to this. Worked wonders for someone I know. 

Lastly request parents to give you a loan to become debt free and promise you will pay them back within next 2Y. 

Kolkata Knight Riders Kolkata Knight Riders
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@looter143

Will try to give an easy route, how to have multiple cc’s yet keep your spends in control.

  1. Keep a specific bank acc just for all expenditure.
  2. When you get your salary, put some percentage of it in this acc, which you feel your max expense should be .
  3. Now whatever you do (CC payments/ UPI/ wallets etc.) do it from this account.
  4. Don’t use the CC’s credit days. Don’t wait for statement generation, Pay off the cc as soon as you find your purchase is good enough, no refund will happen.
  5. Make an habit to check this account before you spending over some specific amount (say ₹1k+)

Credit cards are still quite rewarding in India, but if it’s making you spend more than your capability, then the above habits might help. If still in doubt, please feel free to close the credit cards.

Hunk Hunk
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I have some radical ideas and I personally practice it. 🙂🙂🙂

1) Always set custom limits on CC. I have multiple credit cards. My way to go limit is 10k on my primary card. I use em to buy groceries and stuff. 

2) Turn off NFC, online transaction, international transaction and ATM withdrawal. 🙂🙂🙂 Turn ‘em on when you gonna need ’em. I never use atm withdrawals, so, I keep it off. I don’t use NFC either.

3) Main Point. How to avoid debt trap??? Method 1: Use your credit card as cash card. Method 2: Keep a stash of cash for credit card payment preferably in FD mode. Don’t do that liquid fund etc stuff. . 

Methodology for Methods 1 & 2

1) Assess your expenditure. Categorise them as cash, card, UPI. Honestly as of today I don’t even have 50 paise on me. It’s stupid. But I am fully into digital payment modes. My case is divided between UPI and Cards. 

2) Determine which cards are best for them. For example, if you buy heavily from Amazon then ICICI Amazon pay is best. If you purchase groceries heavily from supermarkets then Standard Chartered Manhattan might work for you. If one has basic cards like Indusind edge aura then also it can give good rewards on grocery purchase. Flipkart Axis gives flat 1.5% cashback, it’s good. 

3) After assessing your expenditure then have the entire money on you. Say, my monthly grocery purchase is 12k. And out of 12k, my card spend is 11k. Method 1 I will pay 12k in advance to that card. Sometimes Mobikwik comes up with these Rupay Cards based offers. It’s good. Then I will use the card as cash card. Rewards n cashback are mine. 🙂🙂🙂 Method 2 I will put that 12k in a fixed deposit. I really don’t trust mutual funds for short term stuff. I am old fashioned. Come on I am above 30. I am old. 🥺🙏 Fixed deposit will give me some interest ( negligible), then I ll set up an autopay thing. I will need 12k for FD and 12k for the autopay stuff. But it gives me the nice cushion. 

Cashback/<Rewards are great. Just remember to set a boundary, in Hindi we call it as Aukaat. I am a common Indian. How much cash brunt can be tolerated by me? 500? 1000? 20000? Everyone has a different threshold limit. Let’s just not cross that boundary. During credit card payment offers, many of us just take the amount to a wallet and start rotating the money. What’s the point? It’s bad naa. What if we don’t have the capability to pay the money back? What if the money gets stuck? Credit card companies don’t/won’t/shouldn’t understand that. And please never ever transfer the money to any mutual fund/ invest in a stock etc. Always own stuff that you can really afford. Everyone is different, these are just my own observations. 🙂

Chennai Super Kings Chennai Super Kings
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bikidas2060 wrote:

I have some radical ideas and I personally practice it. 🙂🙂🙂

1) Always set custom limits on CC. I have multiple credit cards. My way to go limit is 10k on my primary card. I use em to buy groceries and stuff. 

2) Turn off NFC, online transaction, international transaction and ATM withdrawal. 🙂🙂🙂 Turn ‘em on when you gonna need ’em. I never use atm withdrawals, so, I keep it off. I don’t use NFC either.

3) Main Point. How to avoid debt trap??? Method 1: Use your credit card as cash card. Method 2: Keep a stash of cash for credit card payment preferably in FD mode. Don’t do that liquid fund etc stuff. . 

Methodology for Methods 1 & 2

1) Assess your expenditure. Categorise them as cash, card, UPI. Honestly as of today I don’t even have 50 paise on me. It’s stupid. But I am fully into digital payment modes. My case is divided between UPI and Cards. 

2) Determine which cards are best for them. For example, if you buy heavily from Amazon then ICICI Amazon pay is best. If you purchase groceries heavily from supermarkets then Standard Chartered Manhattan might work for you. If one has basic cards like Indusind edge aura then also it can give good rewards on grocery purchase. Flipkart Axis gives flat 1.5% cashback, it’s good. 

3) After assessing your expenditure then have the entire money on you. Say, my monthly grocery purchase is 12k. And out of 12k, my card spend is 11k. Method 1 I will pay 12k in advance to that card. Sometimes Mobikwik comes up with these Rupay Cards based offers. It’s good. Then I will use the card as cash card. Rewards n cashback are mine. 🙂🙂🙂 Method 2 I will put that 12k in a fixed deposit. I really don’t trust mutual funds for short term stuff. I am old fashioned. Come on I am above 30. I am old. 🥺🙏 Fixed deposit will give me some interest ( negligible), then I ll set up an autopay thing. I will need 12k for FD and 12k for the autopay stuff. But it gives me the nice cushion. 

Cashback/<Rewards are great. Just remember to set a boundary, in Hindi we call it as Aukaat. I am a common Indian. How much cash brunt can be tolerated by me? 500? 1000? 20000? Everyone has a different threshold limit. Let’s just not cross that boundary. During credit card payment offers, many of us just take the amount to a wallet and start rotating the money. What’s the point? It’s bad naa. What if we don’t have the capability to pay the money back? What if the money gets stuck? Credit card companies don’t/won’t/shouldn’t understand that. And please never ever transfer the money to any mutual fund/ invest in a stock etc. Always own stuff that you can really afford. Everyone is different, these are just my own observations. 🙂

mind-blowing!

I might use this for my next blog. Thanks!❤️

Deal Subedar Deal Subedar
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As many dimers have mentioned good ways, I will keep it simple.
My 2 rules:
1) I use Credit Card like a Debit Card, by which I mean, I spend only what I have in my bank account. Say I have ₹1L in bank, I wouldn’t buy anything which will be more than (1L – monthly expense).
2) Always, pay your CC bills on time in full (OTIF).

Once you have this discipline, you can start a Recurring Deposit or a Mutual Fund SIP where the available balance will not be in your easy reach. And then, follow the rule 1.

Short term, take loan, pay off CC bills and then pay EMI (I see somebody mentioned this which is the best thing to do)

Chennai Super Kings Chennai Super Kings
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pointshunter wrote:

As many dimers have mentioned good ways, I will keep it simple.
My 2 rules:
1) I use Credit Card like a Debit Card, by which I mean, I spend only what I have in my bank account. Say I have ₹1L in bank, I wouldn’t buy anything which will be more than (1L – monthly expense).
2) Always, pay your CC bills on time in full (OTIF).

Once you have this discipline, you can start a Recurring Deposit or a Mutual Fund SIP where the available balance will not be in your easy reach. And then, follow the rule 1.

Short term, take loan, pay off CC bills and then pay EMI (I see somebody mentioned this which is the best thing to do)

thanks for the points

Deal Cadet Deal Cadet
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The elephant in the room is “depression”. Many do too much shopping just to “feel good” ..there is also a terms for this “retail therapy”. At least I have been doing for many years now 😪  The main issue needs to be solved. 

Deal Cadet Deal Cadet
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Take scissors and cut cards into as many pieces as possible. peace

Chennai Super Kings Chennai Super Kings
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ronydev wrote:

The elephant in the room is “depression”. Many do too much shopping just to “feel good” ..there is also a terms for this “retail therapy”. At least I have been doing for many years now 😪  The main issue needs to be solved. 

how to solve?

Deal Cadet Deal Cadet
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looter143 wrote:

how to solve?

I wish I had a solution. i am too deep in it .. perhaps. 

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