Managing Credit Card Debt

The key to a successful relationship with a credit card revolves around a few factors. First, maintain the agreement, spend wisely, and make payments on time. While the average American holds 2-3 credit cards, massive credit card debt can be a blemish to a credit score.  On the flip side, not having any credit at all can lower a credit score too. 

When handled responsibly, a credit card can build credit and improve your ability to borrow money in the future for a car or home. As a rule of thumb, try to keep your account balance less than thirty percent of your available credit line. Before you commit to any purchase on credit, be mindful and plan to find the best deal and then create a payoff strategy.

To effectively manage your credit card debt, start with these tips:

Know the terms. Every card offers (in writing) their interest rates, introductory offers, and payment due dates. It is the responsibility of the card holder to understand these terms, especially the consequences of missing a payment. Just one missed payment can lead to an increase in interest rate, late fees, and disruption of special introductory deals. In addition, this type of negative occurrence can potentially reflect on your credit report.

Transfer a Balance. If you have an outstanding balance on another credit card, consolidation may be the best way to manage the debt. As an introduction, interest rates on balance transfers are often reduced for a limited-time to encourage faster paydown. Take advantage of this opportunity to consolidate debt, lower monthly interest rates, and reach financial freedom quicker. Most importantly, be ready to change spending behaviors that led up to the initial debt in the first place.

Respect the available credit line. When credit cards issue an account, there is usually a cap on how much you can purchase on credit. The available line of credit is based on credit scores, job verification, and financial history. Just because the line of credit is way more than you need, pace yourself on spending. A credit card is a privilege and can be a life-saving channel if an emergency arises. Abuse it, and you compound debt.

Create online access. Monitor your accounts regularly for updates, alerts, or unusual activity. Stay in tune with real-time transactional activity. Connected 24/7, you can review monthly billing statements online to reduce paper and provide an added layer of convenience and security.

Know how to stay secure. The best way to stay secure is to follow the “A-B-C” plan, always be checking. Nefarious characters are always at work to steal your information and make unauthorized charges on your account. Of course, never give your credit card information over unsecure websites or on shopping sites that seem suspicious. Most credit cards provide mobile apps that allow users to check-up on their accounts, make payments, and monitor activity.

A credit card is a convenient way to pay, track, and monitor monthly spending. In addition, a credit card can be a safety net for a personal emergency, unexpected home repair, or replace a major appliance in your home. If you are ready for the convenience and responsibility of a credit card, start with a VISA credit card from Members 1st of NJ.