Using a credit card is really easy. What’s hard is controlling yourself and making sure that you don’t become a slave to credit card debt. All over the country, tens of thousands of Americans are having difficulties getting their credit card balances under control. If you’re one of them, don’t despair. Follow these simple tips and you will be able to make your debt manageable and regain financial control.
1. Don’t accept cash advances
Credit card companies often use this tactic. They send you a check in the mail and encourage you to use it to pay bills or to buy stuff. However, this isn’t a gift. It’s a cash advance and it starts to accrue interest the minute you use it. The advance also comes with an automatic fee, between 2 and 4%, in addition to a higher interest rate than what you’re paying on the rest of your credit card balance.
Without even knowing it, you invite debt into your home. Even worse, you often have to pay off the entire balance, on all of your purchases, before the credit card company considers the cash advance paid off.
When faced with such a situation, the best thing to do is just to shred the check as soon as you get it. This way you won’t be tempted to use it and you will also prevent others from using it.
2. Be wary of rewards and bonuses
Some rewards might not be as helpful as advertised. So do your research and think twice before making scores of purchases for just one free airplane ticket. Credit card companies want you to use your credit card. They offer these rewards and discounts to you just to get you to spend money on different purchases that you might not even need. And remember, missing just one deadline is sometimes enough to get things to spiral out of control.
There’s nothing wrong to having and using plastic. But it’s better to look for rewards once you have enough experience using a credit card, you trust yourself to not go into debt and you know that you are able to pay your balance in full every month.
3. Refrain from using your credit card for everything
Try to pay for groceries, utility bills and other monthly necessities with your monthly income. Do this and you will really get your spending under control.
4. Also avoid paying your medical bills with your credit card
As you probably already know, medical bills can be really expensive, especially if you don’t have insurance. So don’t add your credit card interest rate onto them.
Because medical debt affects millions of Americans, it has caught the attention of the government, credit bureaus and FICO. As a result, missed payments have less of a negative impact on your credit score. And most medical providers are usually lenient, so it’s better for you to try to negotiate with your hospital, rather than using your card to pay off your entire bill.
5. Try to pay more than the minimum balance
You might think that you’re saving money by sending in the minimum monthly payment, but you’re not. This way you will never pay of your bill and it will continue to grow with each passing month.
It’s better to send as large a payment as possible, even if it means that you won’t be able to buy all the things that you want. Credit card debt brings with it a lot of stress. Don’t underestimate the benefits of living a less stressful or even stress-free life.
6. Don’t ignore your credit card debt
Because of all the stress that comes with it, some people choose to ignore their credit card debt. But not opening your bills each month doesn’t mean that the problem isn’t there. Credit card companies won’t ignore your debt. Interest will continue to pile up and your bill will continue to grow. Your credit score will be damaged as well.
It’s never too late to call the credit card company and ask to renegotiate the terms of your agreement. Maybe you can get them to lower the interest rate, maybe you’ll be able to set up a payment plan to better help you pay off the debt, or maybe you can get some of your debt forgiven. You won’t know until you pick up the phone and call them.
Credit cards are not to be feared
A credit card can be a very useful tool, especially if you learn how to use it responsibly. Follow these tips and be smart, and you’ll never have to fear becoming a slave to your credit card.