Change Your Credit Limit To Avoid Overspending
Just recently, I realised to my horror that I had maxed out my credit cards from one bank. Some insurance payments, income tax, road tax, and other big expenditures totally maxed out my account. I should have realised this when one of my big expenses did not get through and I had to use another credit card from another bank. So, when I wanted to pay off my bill so that I could continue to use my credit cards to earn points, I had to wait for a few days before the money was debited into my account.
Having said that, two friends immediately told me their horror stories about their credit cards. Young people under the age of 30 were the likeliest to rack up huge credit card bills. One lady owed the bank a lot of money because after changing her job, her salary fell dramatically and she continued to charge huge expenses to her card.
One friend decided to shred her credit cards and stay away from them. I thought this was a little drastic, since credit cards can be useful. At the same time, when you want to get loans in the future, having credit cards means they have a longer credit history of yours and it will be easier to get a loan, especially for cars or houses.
Another decided to lower the credit limit to avoid overspending. The bank will do this for you immediately once you call them. You can let them know you want to set the limit lower. Usually, the limit is two times your monthly salary, but if you are spending that amount every month, it’s a little tough to wait until your bonuses come in before you can clear the bills. Remember, rolling over your bills is a very bad idea, even if banks love you for that. The interest rates are extremely high.
Some of my cards have low credit limits because I did not submit my new payslips to them to ask for a credit increase. However, having low credit limits means you cannot spend that much. Everything can be considered important. You can find an excuse for getting that new computer, or that new range of cosmetics. By limiting yourself, you are forced to rein in your spending.
If you have supplementary cards, you can also set the limit. This is good if you do not want your children, spouse or relative to go overboard with spending.
Despite this, you should still keep an eye on your expenditure and increase the income streams. By the way, I’ve cleared my credit card bills and I get to use my credit cards again.
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I normally control my spending. If I do have a big ticket item that month, I will conciously try not to commit another big ticket item. You are right about the high interest rates. I have friend’s friend went bankrupt due to the interest. An original bill of few thousand became a 80K bill. She cannot settle it and went bankrupt…
Good tips! The overspending on a credit card can be nightmarish. An insurance cover to ensure that payments do happen, if for some unfortunate reason you are unable to do so is an extremely important step for all heavy credit card users. I have a Citibank ‘Credit Shield’ program. You can check this option out too.
https://www.citibank.com.sg/SGGCB/APPS/portal/loadPage.do?tabId=Insurance&path=/prod/sub_cat_land/in_ap.htm