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Keep Credit Card Bills in Check

Francine L. Huff
LoanBiz Columnist

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It can be easy to run up large amounts of debt on credit cards. In January 2008, outstanding revolving consumer credit rose to $974.4 billion, according to the Federal Reserve. Much of that debt was due to heavy credit card use as more people struggle to keep up with their financial obligations. Here are some tips to help people keep their credit card balances from ballooning to unmanageable levels.

  1. Set Spending Limits
    Using credit cards has never been more convenient. People can charge everything from groceries to utilities to fast food just by swiping a card. Even Uncle Sam allows people to pay their taxes by making credit card payments. But without a spending plan people are more likely to purchase items they can't pay for at the end of the month. Setting up a budget can help savvy consumers avoid impulse spending, which is a huge contributor to mounting debt. The rule of any shopping trip should be if you don't need it and can't pay the bill when the statement arrives, don't buy it.
  1. Compare Credit Card Offers
    Loyalty doesn't always pay when it comes to credit cards. Interest rates, fees, and other terms may change, so people need to be diligent about keeping track of what's happening with their account. If cardholders are being penalized with a higher interest rate even though they pay their bills on time, they should consider shopping around for a new card with better terms.
  1. Negotiate Credit Card Interest
    However, for some people being a loyal customer with a strong payment history could work in their favor. Credit card companies may be willing to reduce customers' interest rates if they pay their bills on time -- even if they carry a balance. However, people who have almost maxed out their credit limit or have other problems in their credit history may not be able to negotiate a better rate.
  1. Pay More than Minimum Payments
    Making only the minimum credit card payment can keep a person locked in a cycle of debt for years. Even adding a few dollars more to a monthly payment can cut down on the amount of interest paid and get that balance to zero much faster.

Having a credit card doesn't have to mean addiction to lifetime of debt. By adjusting a few financial habits, people can keep their credit card bills from contributing to their financial ruin.

Source
Federal Reserve


About the Author
Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows.

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