Would you be surprised to learn that the annual household credit card debt nationwide is a little more than $15,000?
If your answer was no, would you have expected that figure to be lower or higher? Either way, that amount should be reason for concern, especially for individuals and families that have limited financial means.
With that in mind, here are five keys to properly managing your credit card or cards, giving you a better chance of avoiding long-term financial debt:
- Avoid multiple balances – During the tough financial times of the late 2000’s, it was common for banks and credit card providers to cut back on loans and credit card offers, especially to individuals and families that had marginal or bad credit scores. In the last couple of years, however, more and more homes have been receiving offers to sign-up and apply for new cards. While the offers may be enticing, they can also be a precursor to more financial woes. If you have more than one card at present time, make sure you are paying off the respective balances annually (see below) before even considering adding another card. “When looking to consolidate debt, selecting a credit card offering a lower interest rate is the way to go,” said Chris Mettler of CompareCards.com;
- Choose wisely – In the event you’re looking for a new credit card, don’t choose one out of the blue. Various cards come with various APR’s (Annual Percentage Rate) that you will need to cover for starters. Also make sure that the card provider’s business background is solid. Some companies come with a reputation for average customer service among other issues. Check around and get some input from those you know to see which card providers they recommend;
- Pennywise and pound foolish – If you can’t afford it, probably a good idea not to purchase it. For too many consumers, sticking a charge on the credit card doesn’t seem as painful as paying with cash at the time. That said, the bill comes due sooner or later. Use your cards wisely, not looking to charge every single purchase. If there is a pretty good chance you can’t afford it right now, then that is reason enough not to buy it right now until you have some more cash on hand;
- Review your cards – Although some financial experts will tell you that cancelling a card and/or just letting it sit there unused is not good for your credit score, be sure to review your cards and the card providers regularly. It doesn’t hurt to occasionally shop around for the best deal or deals out there. If you’re not happy with your present card provider, call them to see about getting a better APR for starters;
- Protect your cards – Last but not least, identity theft continues to be a major issue in the credit card world. Although providers have strengthened security measures, countless people still have their credit card information stolen from them yearly. Given credit card holders are entitled to annual free copies of their credit reports, use such information to look for abnormalities in your credit numbers. In the event you witness a sizable and sudden drop in your credit score, it could very well be that someone has gotten ahold of your credit card information.
Photo credit: buzzle.com