Debt and the Use of Credit Cards
I am sure that you, too, get inundated with lots of junk mail. At least weekly I get an application in the mail to apply for American Express, Visa, Mastercard and other companies credit cards. Many come with data filled out already and wanting me to apply for their card.
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’re thinking about accepting some of these offers, be clever about making your decisions. Are you going to pay the bill each month in full? If so, the interest rate does not matter. If not, determine a schedule of payments to get the debt paid as swiftly as possible.
Incentives and rebates are very tempting on the credit card offers, but will they benefit you? If you have to overspend to meet the requirements for the rebate or incentive you’ll not be able to take advantage of them. If you can make the regular buys you have already budgeted for AND meet the stipulations then it might be a good option for you.
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’ve every month you’re going to pay every month anyway. This helps build a sold credit rating without getting into debt.
If you already are in debt, it isn’t prudent to add to that by creating more credit accounts or transferring balances from one account to another. Set monthly repayment goals and stick to them to get rid of your debt instead of adding to it. Look at the luxury things you purchase and apply that money to the debt. For example, if you use what you spend for 1 latte each week and have only 4 instead of 5; you’re finding a way to get out of debt sooner.
Making a simple spreadsheet to show how much you owe and how you’re repaying your debt helps in several ways. It helps you track the progress you are making, shows how much you still owe, shows where your money is going, and helps you make decisions not to buy things that’ll put you further in debt and lose ground on your progress.
After you’ve repaid your debt, reward yourself. Find ways to like life that are free like borrowing a DVD from the library, going for a stroll with your spouse, or discovering other fun activities that dont require money.
When you decide to make a huge purchase with your credit card, plan how much you’ll pay back each month and take the responsibility to do it. Money is valuable so take using credit cards seriously and you can live a good, debt free life.
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