Credit Card Balance: How Should You Handle It?
Friday, October 9, 2009
Millions of Americans use their credit cards everyday for purchasing groceries, appliances, tickets, entertainment and many other products and services. The average American has over $8000 of consumer card debt. Efficient money management can be the difference between a healthy financial life and bankruptcy. A proper balance handling can provide you with many benefits while voiding the potential negative effects that a balance can have in your credit history.
Timely Payments To Avoid Negative Effects
As a general rule, you should always pay at least a little more than the minimum payments on your credit card balances and you should do it always on time. Never wait for the last day to make a payment. If possible make sure to put direct debit of the minimum payment on your bank account in order to avoid generating more interests and damaging your credit score and credit history.
Timely payments are essential to avoid negative effects on your credit report, but they can also guarantee positive effects if you handle your credit card balance correctly. Remember that the minimum payments are designed to maximize the profit of the plastic issuer while reducing their risk to a minimum. Do not pay only that predefined amounts, see what you can actually pay and always try making an effort to pay as much as possible so you save on interests and become debt-free sooner.
Building Your Credit History
By carrying a balance from one month to another at a reasonable pace and making sure that you pay more than the minimum so interests do not accumulate putting your finances in risk, you can start building a healthy credit history as a positive input will be registered by the credit card issuer each month if you make your payments in a timely manner without paying late or missing payments.
Thus, for those that have no credit or want to recover from a bad credit situation, a credit account balance is an excellent tool. And even if you do not qualify for an unsecured credit card, you can always apply for a secured one just for the sake of building a good credit history so you can obtain an unsecured one within a few months. Just be careful when applying as many inquiries will damage your credit, especially when you are turned down.
Precautions To Take On Payments
Payments can be tricky, you may be tempted to take advantage of minimum payments to use the rest of your income for other purposes. It is important to understand that these products carry very high interest rates and thus, if you pay only the minimum payments on your balances, not only you will spend a lot of money on interests but you will risk accumulating too much debt and endangering your finances.
If at all possible you should always cancel the whole balance on your cards even if you have to use savings. Remember that due to the interest rate charged on your credit card, debt will accumulate at a higher pace than the money regular investments like CDs can generate.
Devora Witts is a certified loan consultant who instructs people regarding Guaranteed Personal Loans and Unsecured Loans for Bad Credit. To get aid with your financial situation you can visit her at http://www.badcreditloanservices.com
Labels: credit cards
posted by Junior @ 7:29 PM,
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