Start Limiting Your Credit Card Use

by : Peter Kenny

Many consumers are discovering that their credit card payments are all but eating up every penny of disposable income that they have at the end of the month. What may be a surprise to some is that this cash crunch is no longer a problem only for those with lower incomes. Consumers of all income levels are struggling to make ends meet. If you happen to be one of those consumers, here are some tips that might help.

For many consumers who are having trouble meeting their bills at the end of month because they have too many credit card payments to make, one answer is to freeze some or all of the cards. Freezing a card begins by putting the card away somewhere and not using it for additional purchases and especially not using it for cash advances. If your credit cards are not in your wallet or in your purse you cannot use them. It is that simple.

If you find that you simply have to use the card then make sure that it is used only for those items that are essential for living, such as food. Even so, there is really no way to bring your expenses down per month until you begin to eliminate future purchases placed on your credit cards.

If your credit card payments are really high and you feel you may be at risk of not being able to pay them on time, you may need to consider a bill consolidation plan. A bill consolidation plan is a program that is worked out with a third-party. The third-party agrees to pay off your credit card balances and then invoice you once a month for a single payment. In almost all cases, this single payment made to the third-party agency will be less than what you have been paying in the past for the credit card payments.

In other words, if you have been paying, say, $500 a month to the various credit card companies, you may be able to make a deal with a consolidation agency that requires you to pay only $300 per month. This allows you to keep extra cash in the household budget each month.

These consolidation loans are not without some drawbacks, however. The first is that you will probably have to pay longer in order to get the balance owed to them down to zero. Second, most of these transactions end up on your credit report. They may not cause your credit score to drop by much but they are entered onto the reports and some future lender may not approve a loan because of it.

For many of today's consumers, issues with future credit are not as important as taking care of today's problems. Being late on your credit card payments will certainly hurt your credit history and bankruptcy is also a major blow. With that being the case for many people, bill consolidation programs are a good idea as it beats the alternatives.

Even with a bill consolidation loan, it is imperative that the consumer not get any further into debt. This happens more often than you might imagine. A family suddenly discovers they have more money at the end of the month after they have taken out a bill consolidation loan and the first thing they do is use it to get right back into trouble. Do not let that happen to you.