Credit cards are like relationships. We could live without them, but they are convenient to have and make us feel good. However, if misused, they can bring nothing but stress. Regardless of how we treat them, in the end, it’s going to cost you!
Of course, I am being funny. But there is nothing funny about the average American household carrying $5,700 of credit card debt. Doesn’t seem overbearing on paper, but when that comes with an average interest rate of 18-22%, the struggle is real.
If you currently have credit cards, here are a few helpful tips that I learned along the way that can help you avoid some pitfalls I, like many others, have experienced in the past:
-DO NOT use your cards at all. Because of the interest attached, its always cheaper to just use your actual money. But if you choose or feel you must use a credit cards, avoid consumables (food, gas, etc).
-Manage the amount you spend each month so that you can pay the balance off each month. This is great for your credit score, but still costs you more than using cash!
--Avoid having several cards at the same time. Having one or two is tolerable. Three or more cards can increase your potential for higher overall balances and can make your pay-off strategy difficult to execute and monitor.
--Avoid maxing out your credit lines. One practice that will kill your credit score and put you at risk for over the limit fees is using every available cent. If possible, limit yourself to using no more than 70% of your available balance. Again, your credit score will thank you.
--If you already have substantial credit card debt, it may be beneficial to consult a credit counselor. They can provide consolidation strategies that can lower your overall interest rate and make paying down your balances easier. They may also offer a variety of debt settlement options. I would make this a last resort, however if this an option you want to consider, make sure you have full understanding of the fine print and the impact on your credit score before you agree to anything.