People will often run into credit card debt issues because they do not have an understanding of what it means to practice good credit card debt management. It is often a matter of being able to separate the fact from fiction when it comes to credit card debt.
As you start to contemplate your credit card debt situation, it is important that you take the time to find out the real facts on credit cards and separate yourself from the misconceptions. The more facts you have about managing your credit card debt, the better equipped you will be to develop a plan that gives you the path you need to follow to financial responsibility and hopefully one day become debt free.
– Having a Credit Card
Before you can discuss whether or not it is a good idea to have a credit card, you first must differentiate between a credit card and a retail store card. A credit card is issued by one of the major credit card companies and is valid at many different businesses – this is your Visa, MasterCard, American Express and Discover Card. A retail store credit card is issued by retail businesses and only valid at those stores – this is your Sears, Target or JCPenneys charge card.
A major credit card is a good thing to have as long as you know how to use it properly. You can buy items at most retail stores when you have a major credit card. A retail store card is limiting and not going to help your credit card debt management system. You can start your path to fiscal responsibility by eliminating your retail store credit cards.
– Using a Credit Card
Your major credit card can help you to establish a credit score also known as a FICO score that will help you to qualify for a mortgage or a car loan in the future if you use it properly. The key is that you need to use the card and you need to carry a balance on it and start paying it off. Carrying a balance costs you interest charges each month. You should not charge more than 20% of your available credit on your card. This is an amount that will show you have the ability to manage your credit but will not hurt your credit score.
While you can carry a small balance on your card, you should still plan on paying most of the balance off each month. One good way to get activity on your card without worrying about running up your balance is to use the card to buy groceries and then use your grocery money to pay the bill each month. Use a rewards or cash back credit card to get an extra 1% to 2% back in rewards or airline miles.
When you sign up for a credit card, get one that has a benefits program that suits your lifestyle. If you like to travel, then get a credit card that offers travel miles for your purchases. If you do not travel, then get a card that offers rewards from a catalog for points you accumulate while making purchases. In either case, you should make sure that your card also offers cash back for purchases made.
– Paying Off a Credit Card
If you have accumulated debt on multiple cards and have decided to reduce that debt by paying off those cards, remember that carrying a balance is not a bad thing. If you are insistent on paying off the complete balance on some of your cards, then you should not cancel those cards unless they have an annual fee.
A card that does not have an annual fee will not cost you anything to carry, but the positive effects of having that credit history on your credit report will be well worth keeping the card.
If you are getting overwhelmed with credit card debt management problems, then we encourage you to give us a call. We can do a comprehensive analysis of your financial situation and help you develop a credit card management plan that works for you.
We can negotiate with your creditors to get you lower balances and reduce your debt. We offer consolidation services that are not tied to loans or any other kind of extra financial obligations. It does not matter if you have poor or bad credit as their is no credit check. Our programs are effective and we want to put our years of experience to work for you.