Using Credit Cards and Managing Debt
Dan Jervas
Like most people, I am confident that you get lots of junk mail with lots of applications wanting you to take out credit cards from companies like Visa, Mastercard, and American Express. About every week I get at least one offer and some already have information completed on the applications.
These offers may seem enticing with a low interest rate, it carrying an extra credit card can easily make you overspend on your budget by helping you rationalize the purchases. It is vital to remember that credit card debt in this country is on the rise.
When you are thinking about accepting some of these offers, be clever about making your decisions. Are you going to pay the bill every month in full? If so, the interest rate does not matter. If not, determine a schedule of payments to get the debt paid as quickly as possible.
Credit card companies offer incentives and rebates that appear to be attractive, but analyze if they fit with your budget and lifestyle. If you will not meet the requirements or spending amounts needed for the rebates or incentives without going over your regular purchasing, it is not of value you to have these rebates or incentives since you will never be able to benefit from them.
One financially healthy way to use a credit card is to put small regular expenses on them and pay it off each month. Some expenses, like groceries, that you have every month you are going to pay every month anyway. This helps build a sold credit rating without getting into debt.
The solution if you are already in debt is to not transfer payments back and forth between cards, not to create more credit accounts and to set realistic monthly payback goals. Think about cutting back on nonessential, luxury items to help repay the debt more quickly. If you cut back to four lattes a week instead of five, you are savings money to use toward the debt you have.
To help track progress in paying off debit, make a simple spread sheet to show how much is owed, and what is paid. each month. This will help you stay on track, see your progress and help you not spend more to add to the debt you have.
Reward yourself when you have paid off your debt. But, don't do it by running out and charging something! Go to the library for a DVD you want to share with the family, go for a walk with your spouse, or find other ways to enjoy things that are free and don't involve overspending and getting back in debt.
If you decide to make a large purchase with your credit card, determine how much you will pay back a month and make the commitment to do it. By using credit in a thoughtful way, you can keep debt free . Money is valuable and to get the best use of it, you need to use credit wisely.
About the Author:
Find more info and a great selection of Discover Cards right here. Visit Top-Ten-Credit-Cards.com for a Amex Card .
|
