In recent years credit card use has been on the rampage and consequently so has credit card delinquency. Of course the economy has been a significant influence in pushing consumers over the edge, but there are also other reasons.
This easy use of credit cards often is too tempting for consumers and creates huge credit debt and problems that are even more serious, than those which made a consumer use the credit card irresponsibly in the first place.
A recent trend is consumers borrowing to invest, i.e. racking up debts to buy shares on the stock market or invest in mutual funds. Investing on credit is seen as a high-risk activity and is not recommended for ‘average joe’ investors.
The following strategies can help you keep from getting into serious credit card debt.
Can You Pay Cash?
There are lots of great reasons to use credit cards. They give you airline points, cash back and you don’t need to carry cash around with you. But you should always ask yourself the following question before paying: can I pay cash for this item? To keep credit from getting out of control you should only use a credit card when you know you can repay or pay cash for the same item.
If you currently have a balance on your credit cards, take control and start paying these off. The higher a balance you carry the more you are paying in interest rates. If you can’t afford to pay off the entire balance then reorganize your budget so you can pay off higher amounts of the balance until you carry zero balance. During the time you are paying the balance off, refrain from using the card.
Pay Balances Off Monthly
Once you have zero balance on those credit cards, keep paying the entire balance off on a monthly basis. This is why you only want to make charges that you know you can pay off every month.
Read the Contract
Read the fine print of every card you carry. Restrict your credit card use to those that have better terms, lower interest fees, no annual fee, lower late fees, etc. You don’t necessarily have to cancel the cards you own with higher fees, just put them away in a safe location, to use only in an emergency situation.
Stick to Two Cards
Using credit cards for purchases is convenient, but having and using more than two can be confusing. You could easily forget to pay off the balance on a card you rarely use. So by just using two cards for your needs you can keep your payment records organised.
When purchasing something with a credit card, think twice about the purchase. Leave the item where it is, take a walk and think about whether you really need or want it.
Avoid the Cash Option for huge purchases
Use your credit cards for purchasing needs only. Don’t use the ATM cash option as this involves high fees. Credit cards were made to help you purchase items. Stick to this original use and abstain from any other use.
Following these 7 credit card organisational tips can help you keep your accounts straight and prevent you from overusing your credit cards and possibly getting yourself into severe credit card debt. Also consider insurance that would aid if you have become redundant or lose your job.