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Credit Card Debt: Do's and Don'ts
Practical pointers on how to accumulate debt
by Hale Andrew Antico, Esq.
We tend to think of credit cards as our friends. They provide an "out" when life gets tough. They provide "free" money for goods and services, even if we don't have the money in the bank to pay for them. However, there are many dangers with credit cards. Let's take a closer look at some guidelines to help you control your credit cards, instead of the other way around.
Don't
Avoid Using the Cards to Replace Income
If you get into financial trouble, don't use credit cards to make ends meet.
You would only be making your overall problem worse. Even more terrible would be using cash advances against your credit cards, as they help you dig your hole even faster.
Don't
Avoid accepting too many credit cards
. Really, just one or two is all you need for convenience and emergencies.
Having too many cards can lead to bad decisions and debt that is hard to manage. Do not think that just because they keep offering you more that you can afford it, or that they are doing you a favor. Credit card companies target and pursue those people that have big balances, since they can charge them the most interest.
Do
Be strong when they increase your limit
If you get more credit on existing cards, it is not a compliment. It's part of the overall credit card trap.
.They want you to spend more and more so that you can only afford the minimum payments. There are many emotions involved in an increase of spending limits and more credit cards. Since it's human nature to spend what you have, just say 'no'. You do not need more credit. Which leads us to...
Do
Pay more than minimum payments
This "offer" by the credit card companies is designed to keep you in debt, pretty much forever.
The last thing they want is you out of debt. They want those minimum payments from you and everyone else so that you and all your neighbors can keep feeding them a stream of income... forever. Bite the bullet and try to pay double or even triple the minimum balance each month. Minimum means just that: the lowest they'll take. Don't get suckered into doing just the "bare minimum." Have some flair and get out of debt by paying your balances down.
Don't
Avoid credit financing an unmanageable lifestyle
While most people I talk with have a specific incident in their life that they did not plan for (job loss, divorce, 9/11) which led to financial woes and debt problems, there are still those that use credit cards to live a lifestyle they just cannot afford.
If you cannot afford to buy it cash, don't buy it. Avoid the lure of "free money" on the credit card. It is not free. You will often pay far more than you would even think about paying when you factor in the cost of the interest and borrowing this money to buy the thing you really cannot afford. Save, save, save.
These are just a few rules to follow when deciding how to manage and use credit cards and credit card debt. Bottom line: if you don't need it, just cut it up, whether it applies to new offers, new increases for more debt or to the credit card itself. Live off of what you have and earn, and what you don't spend, make part of a regular savings plan.
!
Don't Delay
| 15.05.2006 | Print |