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Money Matters: Six Rules for Managing Credit Card Debt
Credit is meant to be a helpful tool, an option to make your life more convenient and your finances more secure when you’re shopping or traveling. However, people can easily fall into the trap of abusing credit instead of using it wisely as a financial convenient.
If you want to be the master of your credit card debt load, follow these key rules:
1. Take inventory. How many credit cards do you have? What’s the balance and minimum monthly payment on each? What’s the total balance? If it’s more than you thought or more than you can afford, it’s time to pare down.
2. Check out the cost of your credit cards. What’s the interest rate on each card? What’s the annual fee? Does your card offer a grace period? If the card doesn’t have a grace period, or if you carry over a balance, or take a cash advance, you’re usually charged interest right away.
3. Get one low-fee or lower-interest card and use it wisely. A credit union card can be a great choice; make sure that you put them on your list of rates to review while you’re searching for the perfect card. You may also check to see if you can transfer existing debt from your various credit cards to your new lower-interest credit card – that will help you save on interest and combine your payments to make your life more convenient.
4. Make the largest monthly payment you can afford. Even though you may not be able to pay your balance in full, paying the monthly minimum may do little more than cover the accrued interest. That, in turn, causes additional interest to accumulate, which will, in the long run, be more difficult to pay off.
5. If you get in over your head, don’t bury it in the sand hoping things will magically get better. If you’re having trouble making your monthly payments, contact your financial institution and look for a solution to your problems. Making responsible payments now can help your financial standing, credit rating and peace of mind in the future.
by Monica Wahl, Randolph-Brooks Federal Credit Union Gonzales
November 30, 2010
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