Using Credit Cards and Managing Debt

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.

Carrying another credit card can make it hard to stay within your spending budget and you may be tempted to buy things you cannot afford to pay for. The interest rates may appeal to you by seeming low, but keep in mind that our nations credit card debt is increasing.

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.

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.

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 avoid piling up more debt, it is helpful to make a simple spreadsheet to list all your debt and track it as you pay it off. This helps you see where the money is going, the progress you have made and makes you decide not to make purchases that will add to the debt.

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 make large purchases with your credit cards, do it in a thoughtful way. Plan how much you will pay back a month and stick to that schedule. Take credit card debt seriously and be willing to be responsible for your decisions. With good planning you can live a debt free, enjoyable life.