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Debt: Feeling the Credit Card Crunch

by Alice C. Woodhouse
June 15, 2009
So you've heard of the recent statistics on how the average American family is drowning in $8,000 worth of debt they racked up from credit card. You don't want that happening to you, right? Since you think you're responsible enough not to end up knee-deep in debt yet, why worry? You have to take action, as now is the best time to learn about debt prevention while your debts and finances are still manageable. Handle your financial decision with these tips:

1.Despite the news and images badly presented by the media, these people who are dealing with huge amount of debts didn't really intend to get it out of hand like this. No one really intended to swipe carelessly and max their plastics out. The thing with credit cards is when they're around, you always feel the urge to use them for the slightest reason. Watch yourself and how you handle credit cards.

2.Because prevention is still way better compared to having to scramble when trouble is already knocking on your front door, continue developing that habit of setting up a budget revolved on paying back outstanding balance and interest. Budget is always our best friend. It will guide you on good payment methods and eliminate the possibility of piling up debt. With a clear budget for your bills, you can continue taking advantage of the convenience of credit cards still, but without the fear of things getting out of hand.

3.If you are in a bit of cash rut, you can carry your credit card balance but for no longer than four to six months. Experts say that beyond the six-month point, it will be hard to keep the expense of interest low because of the compounding. So when it gets to the fourth month and you have outstanding balance from previous months, you need to cut your spending entirely and focus on being able to pay it back before the six-month deadline comes.

4.Don't fall for the tricks employed by your credit card company. Always be acutely aware of the terms, your rights, and the changes they pounce up on you. There are now reports that credit card companies are jacking up interest rate for those that have unpaid balances for other accounts. Sneaky, yes? Also, always remain skeptical about freebies or super offers that come your way. Always assume that this gift comes with something bad for you. Call customer service and ask for charges or fees. Though those zero-percent offer may sound like a dream now, be careful because it might just disappear as suddenly as it came when you miss payment or when the promo ends. There are also more abusive practices that your should research. Don't put yourself at a risk!

Always be responsible with your spending, and pay attention to payment deadlines, the terms and conditions and other things that can protect you before trouble associated with your credit card comes around. It is only you who can manage your own finances well.


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Debt: Feeling the Credit Card Crunch

 

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