When Should You Stop Shopping with Your Credit Cards?

We love credit card shopping and the benefits it offers – discounts, cashback, rewards, etc. Saving is obvious with these features. But as everything has a certain limit, these have limits too. We get fascinated by the number but somewhat ignore ‘up to’ written before that. But, don’t we ignore other important stuff? We forget our boundaries even if our earnings are not great. The freedom to shop for anything and the privilege to continue our credit card journey by paying a small minimum due amount put us under the massive interest burden of 30-40% a year. Only the realization comes late. Better be safe than sorry! One way to ensure the same is by knowing when you’re done with your credit card shopping. Let’s begin!

Times When You Should Stop Your Credit Card Shopping

Stop doing fresh credit card shopping –

  • If the revolving debt goes out of control
  • When you achieve the required spending for rewards

Let’s read how showing restraint can bail you out of a potentially dreadful financial situation.

Better Not Create Scope for Revolving Credit Card Debt

It’s always good to avoid fire rather than fight it. Revolving credit card debt can raise your bill enormously high with interest levies of 30-40% per annum as stated earlier. You can avoid the same by doing credit card shopping in line with your income. Ensure you don’t shop for more than 10-15% of your income with a credit card. It will ensure full credit card bill payments and on time, eliminating the possibility of any revolving debt.

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Avoid Fresh Credit Card Purchases If the Revolving Debt is Alarming

Sometimes we forget to visualize the perils ahead and, despite repeated reminders from experts, we go on to shop too much. That makes full payment a remote possibility. Call it the lure or the last resort, people do make minimum due payments, which remain affordable, to avoid late payment charges. But what they cannot avoid doing so is the massive interest charges. That will only make it precarious for you going forward.

There you not only need to avoid fresh credit card shopping but also look to reduce the interest burden. Yes, you can ask the bank to convert the same into EMIs at a lower rate. EMI conversions often come at an interest rate of 13-18% per annum. However, banks won’t convert all transactions into EMIs. Typically, banks don’t allow transactions older than 45-60 days for EMI conversion.

Milestone Spends Done? Revisit Your Shopping Strategy

People shop with credit cards to rake in bonus reward points that can be used to buy numerous items online and offline. To accumulate such points, credit card companies can set a spending target to be achieved in a year. For example, a credit card can come with 10,000 bonus points for which you need to spend INR 1 lakh per annum. In case you accomplish that within nine months, you can revisit your shopping strategy. Having eclipsed the spending target three months quickly may have increased your monthly burden. So, you need to stop or shop less for a while to save some.

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Instances of Cash Withdrawals

While shopping with credit cards gives you an interest-free credit period of up to 45-60 days, cash withdrawals come with interest charges from the very instance. If you have withdrawn cash, you would likely have revolved your debt very high. In that case, you need to put a stop to fresh credit card purchases and clear the entire debt with your savings or a personal loan. You can take a personal loan at interest rates of 10-20% per annum for up to five years. Once you clear the credit card debt with either of these, think about fresh purchases.

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