Holiday Spender: How to Manage Credit Card Debt the Smart Way
Credit card debt is a real problem and many people were even forced to file for bankruptcy as a result of uncontrolled debt. During the holiday season, the risk of bad debt doubles as cardholders charge bigger expenses to their credit, without considering the consequences of their actions.
Are you a credit card owner too? If yes, are you ready to face this year’s holiday season? Can you confidently say that you will not be stuck in credit card debt when the holiday is over? How can you manage credit card the smart way? Consider these answers:
Examine your accounts.
Which of your credit cards has the highest rate of interest? If you own more than one credit card and you plan to use them all this coming holiday, you should be aware of this fact. Needless to say, you want to make sure that you charge the least amount of purchases to your credit card with the highest APR.
It’s also important for you to pay off your credit card balance in full.
If you can submit full payment to all your credit cards, that will be good for you. However, if this is not possible, be sure to make full payment to your highest rate card first to avoid incurring expensive APR charges.
Do not max out your limit.
You should plan your spending ahead to avoid maxing out your credit line. If you own two credit cards and you want to use both for shopping, set a definite spending limit for each card. Check your balance to make sure that there are no unpaid charges from last month. If there is, it would be better if you will zero-in your balance first before you charge new purchases.
Even if your credit card offers a low rate or an introductory 0% APR, be careful that you do not overuse your credit line. This is because maxing out your limit not only increases the risk of bad debt, it can hurt your credit score too. Ideally, you should leave at least 50% of your credit limit free to maintain an excellent score.
Pay more than the minimum.
If you can’t pay in full, don’t be content in submitting just the minimum due required by your issuer. Instead, you should pay off as much as you can from your balance. If you are using a reward credit card, carrying a balance could mean paying an additional 15% to 20% on interest rate charges, making repayment a burden. Thus, the sooner you zero-in your balance, the more you can save on fees.
Check your credit card bill.
You should carefully examine your statement of account as soon as it arrives. Most issuers also offer their cardholders online account access so you can check your account through the internet at any time.
Examine the charges to make sure that there are no errors or unfamiliar purchases in your account to make sure that you’re not paying for debts you did not owe. Review your credit card issuer’s policy on disputes just in case you may need to dispute incorrect or unauthorized charges.
