Top Six Pieces Of Info Your Mama Should Have Warned You About Credit Card Debt
The slowdown in today’s economy has prompted all of us to take a closer look at our finances and to think about what would happen if we lost our job. For so many people today, the scariest part of that idea is what we would do about our credit card debt. It’s so pervasive that there are few people who don’t have outstanding balances on one or more credit cards. Here’s what you should know.
1. Keep paying the credit cards. Missing a payment on one account can cause the others to raise their interest rate also, even if you’ve paid them promptly for years. Sounds unfair, doesn’t it? It’s called universal default and it’s very real. A missed payment can stay on your credit report for years.
2. Paying just the minimum payment each month will not get you ahead very fast at all. But be sure you do pay each month. If you don’t pay a card one month, it could happen that you other card companies will raise your interest rate to you because of the default on an unrelated card.
3. Credit card debt starts early. An average college graduate leaves school with over $2,000 in debt. Paying off is a tough lesson to learn just as you’re starting your adult life.
4. When you have your spending under control, you’ll need to make a commitment to yourself to spend only what you can pay back at the end of the month. Set the credit cards aside and stick to the road to becoming debt free.
5. A large amount of debt will reduce your financial options. If you have a low credit score because your credit cards are maxed-out, then you’re going to pay a higher interest rate when you want to buy something.
6. Many people have turned to credit cards to extend their budget in this recession. They use them to fill the gap and are increasingly using them to do things like buy groceries and pay the mortgage. The problem is that it may take longer than we think for the economy to turn around.
If, after reviewing your standing with your credit cards, you find that you are dangerously close to default, please ask for help. There are businesses out there who are ready to work on your side to get your financial ship back on an even keel. Then follow through with the plan. It won’t be easy to trim your spending or work more hours or whatever it takes to but your budget in balance. It will be worth it, however, to silence the harassing phone calls and the nasty letters. Just think of the day when you can use your debit card freely because there is plenty of money in your account to go around.
