Credit Cards: The Looming Crisis
Your debt situation is in danger and you may not even see the crisis coming.
Credit cards are the bane of most personal debt these days and more and more
people are falling victim to spiraling interest rates and payments that never
get near paying down the principle owed. We all use credit cards and need them
from time to time, but use them smartly. Use these tools to
learn how to manage
credit cards properly and don't let them put you into debt.
Put all your cards on the table
Lay out all your credit cards and their contracts and look at them. The best way to see all the
credit cards you are tied to is to download a fresh credit report
. You may be
surprised at how many you have accumulated over time or are still carrying high
balances on. The average consumer today has up to 12 credit cards at any given
time (see how many credit cards is too many
), a recipe for financial catastrophe. Now that you see the cards, put them
in order from highest interest to lower interest. Anything over 10% should be
marked as bad debt and needs to be eliminated
now. Follow these steps to see
how to get it done simply and all by yourself.
Consolidate your bad cards
Take those high interest cards and do one of the following. Pay them off today
in one lump sum and then destroy the card themselves to avoid using them again.
If paying them off today is not an option for you, start moving balances and
consolidate your cards. Refer to that list you made and choose two of the
lowest interest cards you posses and start transferring the balances to those
cards now. If you can keep all your credit card debt
on a couple of good cards
with less than 10% interest, you are looking good already. Once you have
consolidated your credit card debts
to the low interest cards, destroy all the
old cards and eliminate the temptation to take a step backwards again. This one
trick alone will save you hundreds over the short-term and good easily add up
to thousands over the long haul.
Consider using the debit card
Debit cards are a fantastic option to credit cards. They function the same and
can be used everywhere you use your regular credit cards. The key difference is
a debit card is swiped right from your checking account, so you never pay
interest and you never spend more money than you have. Debit cards can save you
a lot of headache and keep you restrained when making purchases by limiting you
to spending only what you can afford, sounds like good common sense, right?
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