Debt and Credit Cards
May 24, 2008 – 7:25 amLike 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.
Bear in mind when you are evaluating these offers that if you plan to pay off the balance every month, the interest rate is immaterial. If you dont plan to pay the entire balance monthly, determine which card with a low interest rate is best for you. Determine how much you will pay back a month to pay the balance off as soon as possible.
Many companies offer attractive rebates or incentives to use their card. Evaluate the offer to determine if you can take advantage of these offers with your regular spending or if it would require you to overspend to reap the benefits offered. If you cant meet the requirements reasonably within your budget, it is not the card 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 have every month you are going to pay every month anyway. This helps build a sold credit rating without getting into debt.
If you are already in debt, consider cutting back on luxury purchases to pay more on your credit card bills. If you buy lattes 4 days a week instead of 5, you can use this to reduce your debt. It will not get your out of debt to increase your use of credit accounts or transfer balances from one to the other constantly. Make a commitment to pay a certain amount a month and do it to get all your bills paid.
Making a simple spreadsheet to show how much you owe and how you are 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 will put you further in debt and lose ground on your progress.
Reward yourself when you have repaid the debt with something that does not cost money. Take a walk with your spouse, borrow a DVD from the library to watch or find other things you enjoy that do not require money. This will help you live a debt free life.
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.
Tags: Credit
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