Saturday, August 4, 2012, AM | 23 Comments
Credit cards like fire can do wonders. Used properly, it can enhance your livelihood in all sorts of forms. Used recklessly and needlessly, it can totally ruin your financial life. You need to have understanding of how best to use credit cards. It will do wonders for you and your family.
You must be in full control of the credit. Don’t let it control your financial life.
Avoid paying interest
In order to not fill credit card issuers already swollen bellies, pay all your bills before the due date and in full.
You don’t gain “nothing” by paying interest. Instead you lose every time you pay interest. The card issuers are happier than ever when you pay interest on your credit card. So they always win.
When you pay interest, it’s like flushing your money down the drain on your side but on the issuers side, they get all the benefits from your credit card.
Credit card debt is different than mortgage debt
Your mortgage lets you keep a roof over your head. And even though in many communities home prices have come down to the point that many carry underwater mortgages, it still may not be the worst investment you have ever made. Don’t panic.
You lose only when you sell your home if it’s worth less than your mortgage. Hang in there.
Your credit card debt may be due to lack of planning
Whenever you have the urge to purchase something needlessly, stop. Without having a plan for saving and spending, you will keep getting into higher and higher debt every month.
The credit card issuers would hate you for your spending plan and for having a budget. It’s in their best interest that you pay interest on your credit card every month and keep spending without having to back it up with your finances.
Credit card issuers are not at fault
If I were in business for issuing credit cards, I would try to squeeze every penny from consumers pockets and fill my belly some more. That would be the core of my existence.
It is the issuers’ business to keep you on your toes with your sleepless nights because of the heavy burden of debt on your financial shoulders.
It’s free money to them and lots of it when you keep paying interest on your credit cards. That’s one of the best ways they can make some good money.
On top of that, they have been paid handsomely by the U.S. Government because the banks were too big to fail. The economy, we were told, could not afford to lose them.
Screw the consumers as long as cash is flowing to the big banks
Has any bank or any branch of the government ever given a damn about the consumers. Remember if we don’t exist, they don’t exist – neither the government nor the banks.
However, it’s up to us consumers to act responsibly when we use credit cards. Where else can you get a loan for 2 to 3 weeks free of any kind of charge when you pay your bills before the due date and in full.
Instead of letting them keep screwing you, why not screw them. It seems to be a battle between consumers and banks – a sort of cat and mouse hide-and-seek. Never be a rat. Banks would swallow you to fill their bellies.
How to reduce debt if you already have it
I don’t carry credit card debt neither do millions of other folks. We pay our bills before the due date and in full.
If you cannot follow this rule, do the following to reduce and ultimately eliminate your debt.
Must genuinely want to reduce debt
If you truly and genuinely want to reduce debt, your first step ought to be to reduce spending. If you have some kind of mental deficiency and keep spending needlessly, go see a shrink and the sooner the better.
Stop accruing new debt if trying to reduce old ones
Keep in mind that you will never eliminate debt if you keep accruing it. So stop spending even if an item is 25% or even 50% off. The retailers put merchandise on sale to lure you to spend. Please don’t.
You have to be honest with yourself
Make a concerted effort. When you spend one less dollar, that’s one more dollar to apply to your debt reduction.
Have credit card issuers reduce interest rate
Try any which way you can to have interest reduced on your credit cards. Even though you might think that they don’t act like humans on the other side but you would be surprised to know they are, albeit sometimes.
Don’t let 0% introductory offer turn against you
If you are fortunate or perhaps unfortunate to receive a letter for 0% introductory transfer rate, use the offer strictly to your benefit. Read the fine prints in any case and know what shit you are getting into before you step in it.
It may be a good place to start if you know what you are doing. But the 0% introductory transfer rate can turn out to be extremely detrimental to your personal finances if you keep spending needlessly. It can screw you in all direction. You wish you had not accepted this offer.
Pay off the most expensive card first
Start paying off the most expensive card first, i.e., the one with the highest interest rate. For the remaining cards, make sure you pay the minimum if not more. Needless to say, you save huge in interest. You keep repeating the process for other cards.
Destroy the card you pay off
Once you pay off a credit card, keep it in your attic or some place where you cannot access it readily. Don’t use it till you are back on your two feet – financially I mean.
Once done, get a credit card that pays you rewards
Once you get the card, don’t purchase anything that you don’t need, no matter how low it is discounted. Play it safe. Don’t live your financial life for rewards only.
In a Nutshell
Some interest rate credit card issuers are charging is so high it can be considered usurious in nature. Don’t be dumb to make the same mistakes over and again. Let me just say you are too smart for that.
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