Are you someone who is on a credit diet?

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Since it’s almost February end, it’s that time of the year when majority of us are striving hard to meet out New Year resolutions which range from curbing intake of carbs and calories, losing weight, restraining intake of alcohol, eliminating all sorts of toxic relations and emerging into being a better person altogether. The list of ‘fresh starts’ will continue and most often it is seen that the resolutions last for just a month and then they fizzle like ever year and we all sleepwalk into our old bad habits. Till the next New Year arrives, we again wish to make the same resolutions and follow the same fate.

The credit gurus advise people on sliding onto a credit diet. One of the most vital things for your well-being is financial health. Majority of the consumers, as per National Credit Regulator’s Credit Bureau Monitor, around 10 million people are credit overweight and they should immediately go on a credit diet. If you thought ‘credit diet’ to be a quick-fix diet, you’re wrong as this is rather a change to lifestyle which requires discipline. For few consumers who are credit overweight, weight loss (Credit) might occur quickly whereas few others may take time.

Factors which lead to unhealthy credit lifestyle of a consumer

What are the few factors which contribute to the unhealthy credit lifestyle of the consumers which lead to so much debt in the nation? Here are few:

  • Instant gratification: People nowadays are not ready to for wait for a certain period of time for buying something that they have been dreaming of. Even when they don’t have enough savings, they immediately buy with their credit cards which lead to the vicious cycle of debt.
  • Not enough knowledge: People are extremely ignorant about what credit is, what its cost is, the fees, the interest rates, the penalties for non-payment and late payment. This ignorance leads to making poor financial decisions in the future.
  • Over indulgence: They tend to take out credit or respond to the advertisements of the credit card companies. Even when they have credit cards already, they have the habit of taking on more cards without any reason.
  • Peer pressure: There are many who feel the pressure of matching up with their peers regarding credit maintenance. When their peers take on new line of credit, they too feel the pressure of taking on so that they could brag about them in family or friendly gatherings.
  • Unforeseen situations: If you lose a job or there are sudden expenses for which the consumers don’t have any provision, then they take resort to credit.
    Keeping up with the credit diet plan
  • Shun unnecessary offers: You will get many ‘pre-approved’ and ‘you qualify for’ offers which if you fall for will lead you to debt. If you don’t want unplanned monthly instalments, don’t fall for such offers.
  • Clean your credit record: It’s vital for you to pay off your unsecured debt on time and also in full amount. If you make late payments or you tend to skip payments, this information will reach the credit bureaus and hence will hurt your score.
  • Have a debt payment plan: You need to start off with paying back the debt which has the highest interest rate. As the debt is paid off, make sure you close the account.
  • Stop binge spending: Just because your friends took a new credit card doesn’t mean that you too have to get more credit without any reason. Stay away from impulsive credit.

Therefore, now that you know the ins and outs of going on a credit diet plan, follow them in order to adjust your lifestyle accordingly and stay on top of your finances.