4 Smart Ways To Handle Debt Credit Cards
You already know a lot about credit cards. You’ve heard that consumer debt in this country – especially credit card debt – is at an all-time high, while our savings are lower than before. You realize that the boom in online shopping, with an absolute dependence on credit cards, is increasingly fueling its use. You are well aware that running a balance on your plastic – and paying the accompanying non-interest rates is one of our most basic and widespread financial mistakes. And you suspect that a large number of direct letter credit card requests with low teaser rates must destroy the forests of northern Idaho.
However, credit cards are a fact of life of the 21st century, and it makes sense to understand how to use them wisely. Although it might not be practical to remove all the plastic from your wallet, it is wise to limit the number of cards you have, and, of course, to pay all balances in full each month. Indeed, only having a traditional American Express card, which does not allow you to carry balance, can be an excellent way to impose fiscal discipline on you and your family – although, as shown by Visa ads, not everyone accepts American Express. For all of us, who occasionally engage in credit card debt, here are some ways to keep your habits in check.
1. Take advantage of frequent flier programs related to credit cards, but keep in mind that paying high interest balances can quickly turn “free” flights into very expensive ones. With dollars per mile, piling up 25,000 in debt can get you a plane ticket, but that will also burden you with $ 4,500 in annual interest payments, assuming an annual rate of 18%.
2. Look very closely at the credit card offer before you bite. Obviously, most of the 2.99% and 3.99% tariffs will be valid for only a few months. But maybe there are other catches too. Making a late payment, even if it arrives only a day after due, can immediately trigger a permanent increase in interest rates. Also, a low initial rate sometimes only applies to balances transferred, and you may be charged fees for making transfers. Also check to see if there are annual fees, or fees to exceed your credit limit or even to close an account.
3. Avoid the tricks of the extraordinary grace period. What you are looking for is a provision that says that you will not be charged interest as long as you pay the bill in full on the due date. But some cards do not have a grace period, calculate the interest from when you make a purchase, while others only give you a limited time after charging fees before interest is charged. The period of 20 days or more may expire before your payment is due.
4. Don’t forget to cancel the card, you are no longer using it. If not, they will appear on the credit report, and that can be a problem, especially if you apply for a home mortgage. Your prospective lender may be related to providing loans to someone who has a cumulative credit card limit of $ 50,000, $ 100,000, or even more.