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Avoiding The Pitfalls Of Credit Card Debt
According to experts, the average American family currently owes more than $8,000 in credit card debt. This, coupled with all of the other bills and debt accrued through loans and mortgages, and the every day expenses of living, and it's not very difficult to see how easy it is to quickly fall behind, especially if you're relying on credit cards to help make ends meet.
If, like many people, you have several credit card bills to pay each and every month, you may think that paying off the one with the highest interest rate first is the best move toward avoiding spiraling out of control and into debt. In all actuality, paying off the one with the lowest total amount due first will make the most impact on your finances.
Once the lowest debt is completely paid off, take the money that you would normally be paying, and add it to the card with the next highest amount due. Of course if you have two credit cards with similar amounts due, then choose the one with the highest interest rate to pay off first. With this approach, paying off the smaller debts first will begin to make a real difference in terms of your overall financial picture soon than you may think.
Much like most things in life, people usually have to see real results before they're motivated to continue on with whatever it is they're trying to accomplish. Avoiding credit card debt is no different, as your attitude and the way you think about money in general has a great deal to do with whether or not you'll be able to keep your spending under control, and live within your means.
1. Set a strict budget and adhere to it no matter what. Truly look at your spending habits and see what luxuries could easily be eliminated until your credit cards are either completely paid in full, or at least at a more manageable level.
2. It's recommended to never spend more than 50% of your credit card's limit. Doing so not only affects your credit score, but also increases the likelihood that you'll go over the set limit and be charged extra fees.
3. Pay attention to the terms and conditions of your credit cards. Know what the annual fees are, if any, how long the grace period is, and read your statement carefully each month to make sure there are no errors.
4. Introductory offers expire before you know it, and the interest rate you were charged for the first three or six months, depending on the card, could now be considerably higher.
5. If you fall behind, don't be embarrassed or unwilling to call the credit card company to explain the situation. Calling and possibly being able to work out a more manageable payment plan is a far better option than avoiding the problem while the interest rate and fees continue to increase. Most companies will be more than willing to work with you, but only if you're also willing to address the issue and be responsible for your debts.
6. If you discover that you're unable to manage your credit card debt on your own, there are many legitimate credit counseling services that offer viable solutions for helpful people regain control of their finances.
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