Credit cards get a terrible press, being widely blamed for getting people into debt, with experts warning that they should be avoided at all costs.
Used in the right way, your flexible friend can help you to not just manage your money more efficiently, but in some cases earn some extra cash. However, once you have run up credit card debts they can be difficult to pay off, with the temptation to use the account for more and more purchases.
Below are some ideas about how to stay on top of your credit card debts…
1) Leave the card at home
Having the little voice of temptation in your purse or wallet makes it much easier to overspend. If you don’t carry the card, there is less chance that you will make unnecessary purchases. Of course there may be times when you need to use your card, but by not carrying it around, you will be making considered decisions rather than acting on the spur of the moment.
2) If you have no money in the bank, it’s OK to use your card as an emergency fund
However, this means using it to pay for urgent expenditure that you cannot afford and desperately need – like a new boiler or getting your car through the MOT. It’s not there to buy a new pair of shoes.
3) Pay your bill on time
This may sound excruciatingly obvious but it is surprising how many people forget to pay their credit card bill. If you are late paying your bill you will have extra charges lumped onto your account and may also find your interest rate is hiked up by your lender (and yes, they have the right to do that – it’s in the fine print).
4) If you have great credit, try and only use a card which offers a 0% interest rate
In the current economic climate these are only being offered to borrowers with a whiter than white record, so if you get declined, you are in good company. Just remember that even though there is no interest, you still have to pay the money back so it’s not free rein to go wild.
5) If you are lucky enough to qualify for either a 0% or reduced rate of interest, don’t breach the terms
This will cancel out the special rates immediately. And when the introductory period expires, look around for another lender offering a competitive deal and cut your current card up; rates often jump exorbitantly afterwards.
6) Explore reward or cash-back cards
Although you should keep spending on your card to a minimum, if you do have to use it and don’t have a 0% interest option, a reward or cash-back card may offer an alternative. Spending on a credit card is rarely a good idea, but if you have to do it, at least earn yourself some cash or benefits at the same time.
7) Remove the card from your purse or wallet
If you know you will struggle to be disciplined with yourself, lock the card away. Not carrying the card around might be enough to deter you from binging unnecessarily.
Credit card balances can be notoriously difficult to pay off, especially those with a high rate of interest. In some cases, the minimum payment may not even cover the interest being charged each month, meaning the outstanding balance will continue to grow, even if you aren’t using your card!
If you are struggling to pay off your credit cards, you may find help from a professional debt management firms to help get you back on track.
When you have many different creditors, it can be a struggle to keep on top of what you owe and what you should be paying and if you don’t have enough money, trying to organise a reduced payment plan with many different companies can be overwhelming.
Baines and Ernst have been helping people with their debts since 1996 and have a team of specially trained advisors waiting at the end of a phone. If you decide a Baines and Ernst Debt Management Plan is the right solution for you, they will communicate with your creditors on your behalf, freeing you from the burden.
And one of the most attractive things about a Baines and Ernst Debt Management Plan is that you are not tied in to a contract, so if your finances improve you can pay off what you owe and become free of the shackles of debt.