I can tell the holiday season is here if for no other reason than credit card companies are sending out credit card applications by the bulk. Just Friday I received eight credit card applications. Credit card companies are betting that most of us are short on cash and will accept their offers for credit.
The cost of living has increased and unfortunately our salaries are remaining the same. It is important to understand your finances and how much money you are able to spend instead of how much money you are willing to spend. It is a simple fact that most of us live beyond out means.
If you do not know if your credit card company recognizes universal default then now is the time to find out. When you get your next bill read the fine print, or call your lender.
Universal default means that if you are late paying any creditor the credit card company has the right to raise your interest rate. Not only do you have to worry about making sure your credit card bill is paid on time you have to make sure all your bills are paid on time. One simple mistake could cost you a lot of money.
Did you know that making a late payment can cause your interest rate to increase? That’s right your interest can increase up to 21% if you make 1 late payment. So if you are paying 8% interest and you send in a late payment then your interest rate could increase to 29%.
There are several ways to make sure your payment is not late. It will be six months before your credit lender will negotiate a new interest rate with you. The best thing to do is cancel the credit card and start paying it off. This is a good time to become debt free.
1. Pay your bill as soon as it arrives in the mail.
2. When your bill arrives write the due date on the outside of the envelope and then you know when it is due at a glance.
3. When your next utility and credit card bills arrive write down the account number, address that you remit the payment to, and the day of the month that your bill is typically due.
I like to get a calendar and if your credit card bill is due on the 15th of every month then on all twelve months write down the name of the credit card company on the 15th. If you do not get a bill in the mail go ahead and submit a payment then call and ask for an invoice or go online and check the current statement. Keep this information in a secure place in your home.
How many times have you called a company and spoke with someone who says “I will note your account that you will pay after you get a copy of your invoice” and then you get a fat late fee and there is no record of your call? If you have been using your credit card you know you owe something. Go ahead and send in the payment or make the payment online.
4. If you are going on vacation then pay your bills before you go.
5. Call your credit card companies and tell them you will be in Hawaii, or Orlando during vacation times so they will not cancel your card if they see unusual activity. You can call them at their 800 customer service number to cancel your cards if you lose them. This is a good time to find out when the next bill is due if you do not know.
Become Debt Free
Make the decision to become credit card free, or just downsize to one card instead of four. When the holidays end start cancelling and paying off cards. Send the largest payment to the account with the highest interest rate. If you have an unexpected windfall then pay that money towards your credit card bills. Do not create new credit.
Throw those credit card applications away. Sit down today and write down the names of everyone you need to buy a Christmas gift for. If you keep a family budget you already know how much money you have available. If you do not budget now is the time to start. You might be surprised to find out that you are spending beyond your means.
Write down an estimate of what you need to pay for your bills. After determining the amount of extra money you have per month then it is a good idea to start putting at least 10% into savings every month. Everyone should have a cushion to fall back on incase of emergencys or layoffs.
I remember using the excuse that I needed credit because sometimes I needed to be able to order over the phone or online. Thanks to backed debit cards that is no longer an issue. The funds come directly from your checking account. Make the decision today to not create any new debt and to throw all those credit card applications away. You will be glad you did.