Everyone is in debt nowadays, right? Well, not really, however, we do have more people in debt than ever before, and that number is continuing to skyrocket. The reason for this? In a word: Money. The credit industry has realized that they make more of a profit off of less responsible people. So, in today's world, it's easy to get credit, even if you're already in debt - even if you're already struggling to make ends meet on your income.
Think about it. You get offers for credit in the mail, in your email, by telephone - you can't get away from it. Having more credit is awfully tempting to someone who is already in a financial mess. Maybe they need to buy their kids clothes for school, or perhaps their car needs new tires, or maybe they want it just as a safety; but guess what - the credit card companies know this - and they utilize these weaknesses to make a profit.
So, before you sign up for another credit card, consider all the dangers that being in debt ensues. For one, your credit score. The more debt you have, the worse your credit rating - even if you pay on time. While your credit report will show that you are conscientious about your bills, it will also show that you are overextended. It will show how much credit you have available to spend, what your current balances are, and the total amount of lenders you owe. They use this information in the equation that makes up your credit score.
For another, it can cause all of your credit card interest rates to rise. With the Universal Default Clause, your creditors can raise your interest rate if you are late on even one payment - that means ALL of your creditors, even if you've only been late once to one lender. They can also alter your interest rate if you've recently maxed out your credit from any individual lender. Remember, their goal is to make money, so they don't care if your credit is "good" with them - if you default, make late payments, and/or charge up a balance with any of your lenders; it is within their rights to increase your interest rate.
Last, but not least, it is dangerous to the quality of your life. Being stressed about your debt situation can alter your lifestyle; from how you interact with others to being able to buy the home of your dreams. Chances are; if you're in debt, it is affecting more than your finances.
Be aware of the debt you carry and be smart before adding any additional debt to the mix. Get information, get help if you need it, and take proactive steps to reduce your debt. You, your finances, and your life will be far better off.
One of the most successful items in the financial industry is the credit card. In the past few decades, they have grown from one general purpose card invented in the late 1950s to a huge array of cards available. It is true that few adults live without at least one credit card and some people have several of them.
These plastic cards can be very convenient for people who want to shop online or by telephone or mail order. They are also great for shopping offline as there is no need to carry cash. There have been some security scares with credit cards but, in many ways, they are more secure than cash.
Unfortunately, there is a downside to the credit card despite what the glossy advertisements may say. They make it very easy to accrue large debts and often, it is difficult to see much for the money spent. The interest rates are amongst the highest in the credit finance industry so the debt just keeps on building up unless you use the card responsibly. Irresponsible use may lead to huge problems including bankruptcy.
Having said that, there are some ways that you can use a credit card without inviting trouble.
Beware the impulse spending. It’s easy to get carried away with spending when you’re not handing over that hard earned cash. However, when your statement arrives, you may find you spent more than you really should have. Try to resist the temptation to put things on your card because you may regret the decision when it comes time to pay.
Don’t use your credit card for everyday costs or to pay your bills. This is a quick way to run up your credit card debt and is merely a Band-Aid solution to a poorly developed budget. There are other ways to borrow and many have cheaper interest rates.
You can even withdraw cash on your credit card these days but be very careful. The interest rates are usually even higher than on purchases so it can add up very quickly. Also, there is no interest free period on cash withdrawals so it is still going to cost you a lot more.
One of the most important steps you can take to minimize your debt is to pay more than the minimum each month. If you don’t, you will continually be paying mostly interest charges and so forth and never making much of a dent in the actual debt. By paying only the minimum, it may take years to pay off the debt not to mention that you will have paid a huge sum of interest. Try to pay as much as possible each month to reduce your debt.
Finally, it is wise to organise an automatic payment from your bank to repay your credit card so that you don’t overlook any payments. Credit card issuers will happily accept more of your money by hitting you with expensive late payment fees. Don’t give them the pleasure. Keep your money and use your credit card wisely. This way, you should be able to stay out of trouble.
Anne is the owner of two websites http://www.ebooksbargains.com which has a huge range of books on a variety of subjects and http://www.therepairables.com that is a site which can help you in times of financial problems.
Both Kathy Burns-millyard & Anne Wolski are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
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