Credit Card Debt Mounts Up Quick

by : Rachel Yoshida

Credit card debt can mount up a lot faster than you might think, especially if you have never had a credit card before. One of the worst things you can do before you get your first card is underestimate the amount that you can spend on a card in one month if you use it for everyday purchases, even if they are small ones. Most people think that as long as they don't use the card for big purchases, they will be fine, but in most cases the opposite turns out to be true.

During the month you will likely make a lot more small purchases on your card than you will make big purchases, simply because the majority of people will hesitate before making a big purchase. But, what about that $4 purchase at McDonald's every other day or when you go and spend a few extra dollars on cigarettes or beer every week or every other week? Stopping at the gas station for gas and getting soda and snacks there instead of waiting until you get home or get to the grocery store. These purchases can add up to hundreds of dollars on your card before you realize it. So, unless you are already in good financial standing and you can afford to put everything on your card all the time by paying your balance off each month, you should avoid using your credit card for every day purchases like this. They will get out of hand quickly.

Your credit limit is also a factor that can help or hurt your credit score. Simply having a large credit limit on a card can help your score, but if you have borrowed over 50% or sometimes even 30% or 40% of your limit on that card, it can hurt your score. Try to keep a good balance of available credit versus used credit to keep your credit score high.

Getting a card that has a rewards program for whatever hobby you are into is also a good idea. Even if you do not have a hobby, you can still find a credit card that you can get the most out of when you do make purchases. Keep in mind, though, to get enough reward points to make a difference, this is only for those who can use their card on a day to day basis and still manage to pay their card off every month.

Never miss a credit card payment, even if all you can pay is the minimum balance owed. Paying off more than that minimum balance every month will help you get the card paid off faster, but you should definitely try to pay it off every month if at all possible or at least match your payment with what you charged that period.