Are you in debt? Are creditors calling you day and night? If you have credit cards, more than likely you answered yes to one or both of these questions.
Most Americans have a wallet full of plastic. Scattered there between the driving license and the library card, perhaps a travel club card or a discount card, is a plethora of major credit cards, individual store credit cards, and gasoline cards.
Consumers are offered credit card applications when they check-out at stores and, nearly every day, offers for even more credit cards come in the mail.
And, when the offers come, they are difficult to refuse. Consumers are bombarded with messages from advertisers and from society that there are certain products that consumers must have, products that will make our lives easier, better, or happier, products we simply cannot live without. Credit cards make it so easy to obtain these products. Just hand over a little plastic card and worry about paying for it later.
But, the worry does come because debt surpasses the financial standing and affects the entire life. The misuse of credit cards, resulting in credit card debt, will destroy the credit rating, an effect that will shadow the consumer for years into the future.
Additionally, the debt can eventually lead to bankruptcy, vehicle repossession, and home foreclosure or eviction. And, one should not forget the affect that the stress of debt will have on one’s personal and familial relationships as well as on one’s mental and physical well-being.
Once debt has accumulated, it is difficult but not impossible to eliminate. Time, patience, persistence, and discipline will all be necessary strengths to work through the issue. In some cases, a professional financial counselor may need to be consulted regarding possible options for dealing with the crisis. And, the first advice is usually to shred all of the credit cards.
Yet, credit cards seem to be required pieces of identification in society today. If checking in to a motel, the consumer will be asked for a credit card to reserve the room. Some on-line companies only accept credit card payments. Some gas stations no longer accept checks at all.
So, what is a consumer to do? The easiest manner by which to deal with credit card debt is not to allow it to occur. But, how is this done while maintaining the use of credit cards?
Well, it is easiest for beginners or for people without current debt to apply this process to their spending habits. But, with the same traits necessary to eliminate credit card debt, time, patience, persistence, and discipline, it can be achieved.
Advertisers often disguise luxury items, even small ones, as being necessary to life and happiness. Learn to understand the actual difference between a want and a need, and come to learn that delaying the purchase of a luxury item, even a small one, is not diminishing one’s life, one’s ability to have fun, or one’s happiness.
Focus on the responsibility of financial health as opposed to giving in to advertisement messages and sales pitches. This can be a difficult task to master, but it can be done.
Also, take the time to pay attention to what is being felt emotionally when a product is purchased. Does shopping seem to temporarily fill an emotional void? Does shopping make one temporarily feel better about the self?
Can the shopping be stopped or restricted at any time without emotional consequences? Shopping addiction can often lead to credit card debt. If shopping addiction is a possibility, seek professional help.
Use the credit card as a basis for a credit rating instead of an installment plan to purchase items that cannot currently be afforded. Only use the credit card when the money necessary to purchase the item is already in the checking account and not needed to pay another bill.
This will help to prevent problems later when the credit card bill comes due. Of course, this means that certain products or services will not be able to be purchased until the necessary funds to pay for it are saved, but debt will be avoided. Practicing this type of restraint is not easy, but it is much easier than attempting to eliminate a large debt.
So, one may ask, if the money necessary to purchase the item is already in the checking account, why not simply write a check? There are two reasons.
First, if the checking account is an interest earning account, the money remaining in the account for a few extra days may earn an additional penny of interest. A penny is still a penny; it adds up. Secondly, proper and wise use of a credit card will improve the credit rating.
If the credit card is used, pay the bill in full when it comes due. Do not fall into the trap of paying the minimum payment, a partial payment, or a late payment, for this will merely accumulate interest and cost the consumer additional money.
Pay the credit card bill in full each month without exception. This particular suggestion actually bears repeating: Pay the credit card bill in full each month. This is very important in maintaining control of one’s credit.
Each time the credit card is used, make a notation in the checkbook register so that it is clear that the appropriate amount of money is earmarked as having to go toward the credit card bill when it arrives.
Then, make certain not to spend the earmarked amount on any payment other than the credit card bill.
Be certain to keep all credit card receipts. Study the receipts regularly to determine what the credit card is being used to purchase. Search the receipts for unnecessary spending that can be eliminated.
Finally, search through the wallet. Choose to keep only the necessary cards and shred the rest. And, when offers for new credit cards come in the mail or are handed out in the store, shred them as well.
With proper usage, credit cards can improve the credit rating, increasing the chances that the consumer will be approved for a car loan or a home loan when applying in the future.
However, the key rests in using the credit cards wisely, focusing on only purchasing necessary items, making certain that the money for those items is already available for spending, and making certain to pay off the credit card bill in full each and every month.