Credit Card Debt Is Not A Nice Debt To Have
Filed under Credit Card Debt
Did you know that credit card debt might be one of the worst kinds of debt that you can have? Sure, it helps you to get credit, which we need to buy a car or get a mortgage, but it’s also unsecured and has all kinds of fees, penalties and changing interest rates. So, if you’re struggling with credit card debt, you might want to know what you need to do to reign in this situation and take control of your financial future.
Building Good Credit
While it’s true that credit cards can help you to build good credit, if you don’t use them the right way, not only will your credit card debt pile up, but you’ll kill your credit rating too. For instance, did you know that any time you use more than 1/3 of your available credit, your score goes lower? Did you know that even if you’re paying the minimum due each month, you are unlikely to build good credit? Your credit report is looking for responsible spending and that means that you don’t make frivolous purchases and are always aware of your bottom line so that you can easily pay off your debts.
That being said, if you are struggling with credit card debt and your credit score, then you need to get control of your situation right now. The first thing you want to do is maintain your payments on time, but get your balance down to around 1/3 of your available credit and keep it there. Continue working to pay your credit card off by making payments that are higher than the minimum amount due and watch what you spend and where you spend it.
Cash Advance Anyone?
There is no denying that credit cards are really great tools if you like to have resources and “fall back” funds. Some people use their credit cards to buy gas each month and then pay it off from there. The point is that if you don’t use your credit card the right way, you will very likely wind up racking up the big debt, so it’s time to consider when to spend cash and when to put it on your card. Consider using your credit card for major purchases, but have a payment game plan set up so that you can pay it off in the least amount of time with the lowest interest.
Also, keep an eye on your interest rate and don’t pay for things with your credit card if you have the cash. Essentials such as electricity should only be paid for from your checking account because you shouldn’t have to pay interest on them, but if you put these expenses on a credit card that carries a balance, by the time you pay it off, your $100 electric bill could wind up costing you a couple of thousand dollars. Make sure to consider the options to avoid racking up unnecessary credit card debt.
When kept to a minimum, credit card debt can be manageable, however, too many of us just don’t know how to balance our books so that we can pay it all off every month and many of us really don’t care to. Before you run out and build up more credit card debt, you need to take a good look at how these behaviors will affect your financial security in the long run.
