1_credit-cards.jpg

My brother laughed when I told him I had gotten my first credit card. He said that I would max it out in no time. Although my limit was not very high, I did just that. I made excuses as to why I had maxed it out (as most people do) – like, that extra $100 for my third suitcase going home for the summer from University. Credit cards are helpful if you are ever in a jam or you need to make a purchase in an emergency. But if they are used to spend money on aimless items they can seriously hurt your financial situation, not to mention your credit rating. I am also amazed to see people with two or more credit cards; I think one is enough, although there are some instances where two can be useful, as I’ll describe below. Let’s take a look at some ways that you can get yourself out of credit card debt (the worst kind of debt!):

-Pay down your principal, not just the interest! By only paying the interest on your debt you will never pay down the principal. Especially if your debt load is higher, make sure to make a dent in what you owe.

-Negotiate a lower interest rate. People are surprised at what they may get when they just ask. You may be able to knock down an 18.5% rate to 14.5%. That can make quite the difference; see for yourself when you do the math!

-Consolidate your loans! If you have two or more credit cards, consolidate the debt onto the card with the lowest interest rate.

-Check your credit rating. Keep tabs on your credit rating; it usually takes 1-2 years to fix bad credit rating and build a good one. (Canadians can check their credit rating through either Equifax or TransUnion).

-And the simplest step of all, don’t use your credit cards as disposable income!

Hopefully by using these steps you too can pay down your credit card debt (and learn some valuable lessons along the way). Not to mention, avoid laughter then next time you discuss your credit card!

Julia Crawford
www.wealthforinvestors.com

Share/Save/Bookmark