Don’t Get Caught in the Debt Trap

There’s only one way to fulfill your dreams and that’s through hard work and perseverance. Taking shortcuts can land you in a big soup like a debt trap. In this post, we discuss essential tips to stay away from debt trap, forever.

Tip#1 – Use credit cards wisely

Credits cards have made things easier. You no longer have to carry a lot of hard cash in your pocket. However, useful as credit cards are, the careless use can result in a lot of debt. Don’t purchase items, unless you can afford them.

Tip#2 – Pay your credit card monthly

Each month you receive your credit statement, which lists, among other things, the amount you due and the minimum amount you have to pay. Often, consumers pay only the latter. That’s a huge mistake. Credit card companies charge exorbitant interest rates. When you pay only the minimum amount, your next month’s due amount inflates, and the same thing happens next month too if you only pay the minimum amount. If you continue with this, very soon the total amount due will snowball into a huge figure which can give you many sleepless nights and hurl you down into the dead-end road of the debt trap.

Tip#3 – Approach lenders only when absolutely necessary

You should approach legal money lenders Singapore only when all other efforts to raise cash have failed. For instance, if you need a personal loan and banks have rejected your application on the count of poor credit history, you might then approach a lender. However, keep in mind that you must take only that much loan which you can repay. Money lenders charge a higher interest rate than banks, so taking a lot of loan from them is inadvisable. Another thing you must remember that you must only approach lenders that are licensed and avoid loan sharks like plague. The former are regulated by law, and as such follow certain rules and regulations.

You can also approach money lenders for small, temporary loan, like a payday loan. However, it is necessary that you pay off such a loan quickly, with your next pay. Extending the payoff date of your loan will make things worse, as you will have to bear the expense of extremely high-interest rate.

Tip#4 – Consolidate all your debt

If you have outstanding debt on multiple credit cards, it would make much sense to consolidate all your debt by taking a personal loan. This will help you save money on the interest rate of personal loans is significantly lower that credit card interest rate. It is possible that you might not be able to get a loan from the bank or a financial institution. You shouldn’t lose hope if this happens. Instead, approach a licensed moneylender Singapore with a good track record. Even the personal loans offered by money lenders typically have lower interest rate than the credit card companies.

Last but not the least, learn to plan your finances and show discipline in your spending, lest you’ll fall into debt trap again.