Friday, March 12, 2010

Top 5 Ways To Get In Trouble With Credit Cards

Credit cards aren’t evil; they are only another financial tool. As with any tool, it all depends on the users whether they hurt themselves or not when using them. If you want to avoid getting in trouble with credit cards, or even a payday loan, here’s what not to do.

Take Out Credit For Everyday Expenses :Whether it’s a credit card or a cash advance, if you’re using the money for every day expenses like groceries, gas, or even trips to the hairdresser, you’re bound to get in trouble. Save the credit cards for when you really have no other option. It’s always best to live within your


Take Out More Than Two Credit Cards:When times were good, you probably got a ton of credit card offers. If you have more than two cards, strive to pay off all of the extras and keep two only. This not only helps with managing bill paying, but it also helps keep the tempting plastic out of your sight.

Make Late Payments:No matter what loan you have, a late payment of 30 days will show up on your credit history. You will also be served with a late penalty fee. Due to the Credit Card Act of 2009, you might not get an interest hike until after 60 days being late, but it will go on the credit report long before then. Make enough late payments and you’ll be paying far more on the bills than necessary and you will damage your credit to boot.

Have No Plan To Pay Off The Balance:The goal for a credit card is to be a revolving credit line. However, if you carry a large balance any hike in the interest rate is going to significantly impact your minimum payment. Transferring large balances to a lower rate card is problematic because you will be charged a 3% transfer fee on the balance transferred. Instead of playing credit card roulette to reduce finance charges, make it a plan to pay off the balance.

Refuse To Talk To Your Lender:Okay, maybe you got behind, made a few late payments, or lost a job. Now’s the time to talk to the lender, not ignore them. Many lenders are willing to work with people to set up a payment plan that can work for them, but you won’t know unless you answer your phone calls. Always seek to negotiate a debt, rather than ignore it.

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