This is a guest post from Debt Lead, who has a debt consolidation website by Kimberly Credit Counseling.
Debt is a challenge we all face and we will let it ruin us if we aren’t careful. Here are a few minor details about credit cards and credit that we should watch out for.
Balance Transfers
Transferring the balances of your high interest cards to lower interest rate credit cards may seem like an effective way to reduce your debt, but the easy way out is sometimes a good idea gone wrong. Transferring a balance onto a credit card with a low introductory interest rate can potentially save you money on interest only if you STOP using it and focus on paying off the balance before that introductory rate expires! If you are like most people who continue to charge on the new credit card, you are just digging yourself into a financial hole with more debt once the lower interest rate is over. One thing to look into is that new purchases may pull an altogether different interest rate than the introductory rate so read the fine print very carefully.
Why Check Your Credit Report
You should pull your credit report at least once (if not twice) a year and make sure it has no errors on it. Taking off these errors can be crucial for getting better interest rates and even stopping identity theft from ruining your credit rating. Your credit report also affects your credit score, which determines how high your interest rates will be on future loans that you may need, like a mortgage or car loan. The Fair Credit Reporting Act allows for the correction or deletion of inaccurate, outdated or unverifiable information, provided that a reinvestigation into the disputed data sides in your favor. Unfortunately, negative but truthful data must stay put. A Chapter 7 bankruptcy filing, for instance, will remain on your credit report for 10 years, a Chapter 13, seven.
Charging Instead of Using Cash
Have you ever charged for services or merchandise when you had the money to pay with cash or debit? Purchases of $20 and $30 made several times a week over and over can add up quickly. Balances you can’t pay off each month mean paying interest charges and, subsequently, more money for items you could have bought outright, interest free.
Debt is everywhere so look and be alert about it! I hope that you learned or was reminded of what to watch out for in this article!
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{ 3 comments… read them below or add one }
I sometimes use my amex card simply for convenience but have a habit of dropping the ball and not paying on time. No financial problems just a terrible memory (when it comes to finance lol.) My hubby has now convinced me to lock it up at home!!
I tend to be good with my credit cards and never use more than I can afford. I also pay in full every month
Hope I can keep up this habit.
Very good article!
Reading your blog reminded about the “bad debt situation” that a lot Americans are right now because of “credit- card”
I agree with you that people should be very careful using a credit card and they should use wisely and plan when and where they will use it.
And more than anything they should avoids using their credit card for impulse purchases.
Another good thing to avoid is…anything your card issuer tries to sell you.
And, yes speaking of hidden fees, you should think twice before using your credit card abroad.
People should ask themselves before purchasing with credit: Is this something I need? Do I need it now? Do I have the ability to repay? How long will it take me to repay? How much will it ultimately cost me?
Another day a friend made me this question? Credit card, A hero or villain? A help or trouble? My answer was both.