Charles H. Miller
It is really hard to imagine a modern life without using credit cards. Whether we are making small or big purchases, all of us rely on them on a daily basis. While this seemingly abundant credit is a good thing, it can lead to problems down the road. Way after you made that purchase, you get a bill you have hard time repaying. Here are 6 signs indicating it’s time to rethink your credit card habits.
1. You pay only the minimum required to keep your account
There are priorities most of us follow — first we pay the rent, water and electricity bills, and other necessities of life. After that, some of us have to pay off a credit card bill. If you can’t pay more than a minimum, you have some spending problems.
While making the minimum payment will keep your account up to date and in good standing, it will take years to knock down the balance. Also, you’ll end up paying a ton in interest. Instead, if you pay more every month, you will cut down on interest payments and the time it takes to repay the entire debt.
2. You rely on balance transfers too much
Credit cards with 0% intro APR are neat to get you out of debt, though that game must end at some point. You can transfer from card to card, but at some point you can start losing your way.
Don’t get me wrong, a card offering 0% is a great tool that can be used to potentially save thousands on interest payments, and I personally have one of those. However, if you constantly switch from one 0% card to the other, chances are your credit card spending is out of control. And it’s time to do something about it.
3. You’ve maxed out on your credit card
Every credit card comes with a limit and if you’re close to that limit, again, it’s time to rethink your spending habits. It’s a good practice to leave some room on every card you use, so you can extend more credit when you really need it. I’m talking about emergencies, not a fancy new car.
Also, maxing out your credit limits can have a negative impact on your credit score, hence making it more expensive for you to use a credit card in the future.
4. You can’t stop shopping
These days there are “hot” deals everywhere and many retailers bet on our impulse to spend. We buy both things we need and those we don’t. It’s easy to spend hundreds, even thousands, with zero cash in your wallet. That’s one of the reasons every major store, hotel chain and airline has its credit card. They want us to spend more. And while that’s not necessarily a bad thing, if you can’t control yourself – it can be a problem.
The best thing you can do is to use cash for smaller purchases, say up to $100. And if you don’t have cash, don’t buy it. Shopping lists can also be helpful if you learn to stick to them.
Finally, restrain from buying non-essential items you can’t afford. Using credit cards for this will only get you in trouble.
5. You hide debt from your family
This is a clear sign you should rethink your way of life. Buying things left and right is nice until the bill arrives. If at that time, you have to hide your credit card bill from a close family member (i.e. spouse), it’s time for a big change. Hiding debt can hurt your relationship, so it’s better to work together on solving the (spending) problem.
6. You have more than a dozen credit cards
First let me say that there’s nothing wrong with owning multiple credit cards. I have one I use when shopping for groceries, one for gasoline, a few for travel (hotel & airline), two store cards (from stores I regularly visit), and one for balance transfers. Also, I use a debit card for taking cash from ATMs.
Those store cards are trickiest to use, despite offering some amazing deals to their holders. You see, some of these cards come with interest rates that go up to 29%, which is ludicrous. You have to read the fine print before getting yet another store card. And you have to use them carefully, making sure your debt is repaid as soon as possible.
What can you do?
First thing you should do is to get to know your debt. See how much you owe per each credit card you own. Go further and discover how much of that money goes to interest and how much to the principal debt. Consequently, this could lead to try some card with the long 0% APR period. Nothing to be ashamed there, just make sure you keep tabs on your debt once you get another credit card.
You can also seek for counseling, and/or ask your bank for a lower rate. Stop (over) spending and start using cash as much as you can. Good ol’ paper will keep you in check.
As for that card with 0% APR, I suggest you consider Citi Simplicity® Card – No Late Fees Ever. As its name says, it won’t induce late fees and penalty rates. But, you shouldn’t misuse it, cause you’ll quickly be back to where you’ve started. Good luck!
