It’s not credit cards that can hurt their users’ financial standing (think excessive interest charged, incentive to overspend on things one can’t really afford, or the negative impact on one’s credit score from missing all those monthly bills), but how many Americans use them. Indeed, it’s all too easy to procrastinate when it comes to the monthly tab or just pay the minimum amount, assuming that it won’t really do all too much harm to one’s financial standing.
Of course, missing a payment or two isn’t all too detrimental, as making it a habit over the span of many years. And while credit cards may have a bit of a bad rep with various gurus, I do think it’s the behavior of irresponsible users that should be addressed first and foremost.
It’s all too easy to pass the blame for a dire financial situation onto your credit cards. Indeed, credit card interest rates can be stupidly high. And they can send someone who’s in a tough spot into a black hole of financial pain. For those who don’t make the entire payment come bill time, swiping credit cards can be like poking a wasp nest with a stick. It’s just not a good idea, as you could get stung more times than once.
Key Points
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People in credit card debt need to stop blaming cards and take a good look in the mirror.
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It’s easy to fix one’s relationship with credit cards, so long as one ensures they pay the full amount every single month.
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Stop blaming your credit cards and start blaming yourself if your credit card is on the ropes and you’ve sunk deep into consumer debt.
If you’re not all too great with credit cards, budgeting, or personal finance in general, it’s never too learn to right your path. The good news is that it’s an easy issue to correct, especially if one can take those small steps by putting a rough budget in place and setting reminders so that one doesn’t procrastinate and let their credit score (and bank accounts) start to drain steadily over time.
At the end of the day, credit card interest rates are unreasonably high. And you should behave as though you cannot afford to pay a single penny in interest to a credit card issuer. If you don’t allow interest to be charged and you start earning cash back on all your essential purchases, you can have your way with the credit cards.
However, the first step is not to allow credit card debts to become more than a month old because by then, you can expect to pay a bit of interest on top!
Whether that means paying off the balance within a week, biweekly, or once that statement gets sent to your email inbox, the important thing is to take all the proper steps to ensure the double-edged sword that is a credit card doesn’t slice your wallet.
It’s not just about paying the credit card bill in full.
Paying off balances is the only way to ensure you won’t get dinged interest, provided you’re not only on a zero-rate card during a promotional period. Having many credit cards and a really high credit limit (the max amount you can put on all your cards) can encourage overspending. When you can buy now and pay later without 100% certainty that you’ll have the full amount to pay later, you can get into some serious trouble.
Beyond that, though, I think it’s worth keeping tabs on your utilization rate (the percent of the credit card limit you have in debt) and your spending patterns. Indeed, we live in a society where it’s okay to go into debt to live in the present. And while it’s easier to use your credit card than to actually pay with cash (believe it or not, parting with physical cash can be pretty painful!), users should treat their credit limit as they would cash to avoid stretching beyond their monthly budget.
Bottom line
At the end of the day, if you stay onside by paying off your bills on time (or ahead of time) and stick safely within the confines of your budget, credit cards can be a huge boon for your finances. With cash back and points, you may never need to pay full price on goods ever again (a few percentage points in cash or points), as you would with cash.
Combined with other offers, your card (especially one with annual fees) may have, and it’s clear that credit cards are a tool, one that can empower users. They don’t have bad intentions or good ones. They merely give those with good financial hygiene a bit of a jolt, while penalizing those who procrastinate and avoid checking their inbox when it comes to bill time.
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Here’s how it works. You find a card that offers a 0% balance transfer feature (not all do, but theses ones are top picks from the editors at FinanceBuzz). Next, you transfer your current balance to this new card, securing ZERO interest payments for the intro term, then you use the savings to pay off debt faster. The math is straight forward, and can save you hundreds, thousands, even tens of thousands of dollars if used correctly. Find the right card for you by clicking here.
The post Blaming the Card? The Real Issue Might Be How You’re Using Your Credit appeared first on 24/7 Wall St..
