Consumer Bankruptcy & The Use of Credit Cards
How to Avoid Bankruptcy through Good Use of Credit Cards
One of the most preventable causes of consumer bankruptcy is the misuse of credit cards. One client said it felt like they were being squeezed by an anaconda and every move they made just made the snake squeeze tighter. At our office we understand how awful it can feel to have your credit spiraling out of control. Here are some common-sense tips for using your credit wisely. Let us help you obtain your fresh start for a new tomorrow by contacting the Ohio Estate Attorney, David J. Smith, at (937) 318-1529 for a free consultation.
Shop Smart And Avoid Annual Fees
When shopping for a credit card look for cards with no annual fee, or as small a fee as you can get. The fee to use the card is pure profit to the credit card company and of no value at all to the consumer. Fees are now capped at 25 percent, thanks to a government program designed at taking much of the burden of credit card debt off of the average American citizen.
Avoid Reward Cards
Most people do not need an incentive to use their credit card. It is also vital to understand the very little amount of money you can get by using a “cash-back” credit card. Most people don’t realize the amount of purchasing needed in order to rack up the amount of points needed for their reward.
Credit card companies charge huge penalties and fees when you take out cash advances on credit cards. On top of the penalties, a fee is usually assessed when you take out the money, furthering your financial headache. Credit card companies work very hard to make using the card as convenient as possible. These fees add up quickly.
Your Credit Score
Your credit score is intimately tied to how you utilize credit. When you have a high balance compared to your credit limit, it looks bad. Experts advise not spending more than 30 percent of your credit limit at any given time to maintain good credit.
Avoid Paying The Minimum Amount
If you consistently pay the minimum balance due every month, you end up paying much more in the long run for items you purchase on your card. In the end, the interest causes you to pay more than the balance sometimes, say the experts. Think of that $2.25 latte costing you much more if you put it on the credit card. Pay twice or triple the minimum in order for you to be debt free in less time.
Avoid Balance Transfers
Some offers seem like a great idea; move high interest balances to low to no interest cards in order to save on the interest. However, some cards have fine print that states the rate will rise to much higher than the introductory rate after the promotional term is completed. Beware say the experts.
Don’t Pay Late
The internet gives you the ability to monitor your credit and pay your bills on-line. Take advantage of these tools. If you have the money, pay the bill on time to avoid paying late fees and interest. Get to a point where you are uncomfortable maintaining a balance on your card.
Use a Free Credit Monitoring Service
Free credit monitoring services, often offered through your personal bank, or through various on-line providers, suck as CreditKarma, are a great way to see your full financial profile. The different providers allow you to see how much total debt is owed, what percentage of your credit is being used, your credit score, and some offer ideas of how to improve your credit. Be careful though – the ways these sites make money is by offering you services you may not need, or other types of credit cards. Double check any suggestions with a financial adviser to avoid suggested actions that are not necessary.