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Credit cards are a near necessity these days, and they’re much too easily abused. Wise use of them means that they’ll make your life a little easier and you won’t regret what you’ve spent your money on.

How do you use credit wisely?

The first thing to remember is to be honest with yourself about how you’re using it. If you’re going overboard and using your credit cards to hide the truth from yourself it’s all too easy to end up in a financial hole that’s near impossible to get out of.

Most important in being honest about where you are financially and especially with credit is to look at the numbers. Are you really where you think you are?

Too often the answer is no, you aren’t. There’s something you forgot when you decided that things were going well. But if things are going nicely, it’s a great feeling to know that you were right about your situation.

The second thing to remember is to not go overboard. Even if you have the credit, do you really need to buy everything you think you want? Saving and investing is often a much better plan for the long term than spending freely.

The third thing to remember is to not make excuses for what you spend. When money is tight it’s easy to dismiss running up the credit cards because of holidays and birthdays. If you can’t afford to spend the money, perhaps you should cut back. Other people will generally understand.

The fourth thing is to make sure you are getting the best possible rates on any credit cards or other debts you’re carrying. There’s no point in paying more for the money you owe than you need to.

Make sure your interest rates haven’t been climbing for no good reason. Credit card companies do sometimes increase rates without what you would think of as a real reason. If your rates are going up for no reason, and the company won’t lower them, remember that there are plenty of options out there. Remind the company of that too, and be prepared to follow up and find someone who will offer more reasonable terms.

Finally, know your own weaknesses. Do you fall for impulse purchases often? Do you just love spending money? Do you love to eat out?

If you know where your worst spending habits are, you can address them. Find ways to keep from spending excessively in those areas that really don’t work well for you.

Set a budget for those things you don’t want to give up on completely. It’s often harder to give something up completely than it is to find a way to enjoy it in moderation. There should be some room for fun in most budgets.

Technorati Tags: using credit wisely, credit, debt, budget, budgeting, personal finance

The entire point of having a rewards card is to get paid for what you would spend anyhow. These aren’t the right choice for everyone. For example, if you tend to carry a balance and the rewards card carries a higher interest rate than a plain credit card, you may be best off with the plain one.

But when you have the rewards available to you, you may as well make the most of them. How can you do that?

1. Choose the right rewards card.

What are your shopping habits? Many cards give higher rewards for certain types of purchases. If this corresponds well to your own spending habits, you’ll earn more.

For example, if you telecommute or have a very short drive to work, and do little other driving, a gas rewards card probably won’t benefit you as much as one that pays you back on other types of purchases. But if you have to drive a lot, this type makes a lot more sense than others may.

2. Drop any with an annual fee.

There are plenty of no annual fee rewards credit cards out there. If you’re paying to have one, you are probably losing out on a lot of what you would otherwise be getting from it.

Think about how much you would have to spend to cover a $50 annual fee. It’s about $1000. Why lose that much of your shopping power?

3. Use it as much as possible while paying the balance off.

If you can keep the balance of the card paid off, there’s no reason to not earn rewards on the money you have to spend anyhow. Many bills can be paid on credit cards, and of course regular purchases such as clothes and groceries can go on them too.

4. Don’t spend just to earn points.

Spending money because you like earning points or rewards is a good way for things to get out of control. Think about what you really need, and don’t forget that saving money for the long term is important. There are no good reasons to spend just to see your points go up on your rewards credit card.

5. Know the terms.

Sometimes the percentage rate you get back changes in 6 months to a year. In other words, the most advantageous rewards credit card now may be different when the terms change. Keep up with what the credit card company is giving you.

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There are some very good reasons to carry credit card debt. Unfortunately, too many of us carry it for bad reasons.

But even when you go into debt for good reasons, it weighs you down. Limits you. Makes your life just that much harder.

Credit card debt is quite simply a strain on the finances.

I’ve been working for a few years myself trying to get out of credit card debt. I had been solidly on my way when we were slammed by some medical bills that wiped out all my progress and then some. It has taken a year to recover from that and get to where I feel as though I’m making progress again.

In the meantime, we’ve had to live more frugally than ever. Keeping up with all the bills becomes a struggle. The added debt was in a good cause, but dealing with it has been a strain.

What to do, what to do?

First thing to do is to live frugally as you try to get rid of the debt. Figure out what you can cut from your lifestyle to save money. There are many different ways to do this, such as eating out less, sticking to a paid-off car rather than replacing it, even cutting back on retirement savings.

With this extra money you need to work hard on paying off that debt. Do not pay the minimum. Even a tiny bit over that will be a help in the long run. The more you can pay, the sooner the debt will be gone.

Cutting back isn’t enough?

It may be time for a second job or taking a chance on a home business. You decide. But in any case, bringing in some more money is a great way to pay down your debt faster. It’s a big sacrifice, especially if your current job already takes up much of your time and leaves you feeling tired, but sometimes that is what it takes.

The home business option is not for those who need money immediately. There’s risk involved. You probably won’t earn significant amounts quickly. But it can also be a lot more fun.

Debt is a terrible thing in so many ways. It stresses relationships. It limits what you can do financially, even beyond what your current earning levels may do. It takes away money that you could use much more effectively. Once it becomes possible to rid yourself of debt, it is a very good idea to do so.

Technorati Tags: credit card debt, personal finance, money trouble, financial problems, too much debt

Credit cards are very tempting during the holiday season, but too many people spend months paying off their holiday expenses. It’s really not the smartest of financial moves.

But that doesn’t mean you can’t use your credit cards for your holiday shopping. It just means you should be considering your overall budget as you do so. Credit cards are very convenient, after all.

Figure out your shopping budget. You want your finances to be prepared for the holiday season. Think about how long you want it to take to pay off whatever you put on your credit cards for Christmas and other holidays.

If you choose to spend more than you can pay off immediately after the holidays, work out how you’re going to pay things off beforehand. Think about what you will be willing to pay each month and how many months this will take. This can also help you to decide if all the spending will be worth it.

Credit cards are the easiest way to shop online, of course. Remember as you shop online that many sites such as Amazon offer free shipping if you spend a certain amount. Don’t try for that amount if it’s not in your budget, of course, but if you have to ship the gift anyhow buying online means you don’t have to stand in line at the post office. The trick can be deciding what to do about gift wrapping, which is not cheap through most sites.

Sanity about spending can be difficult to maintain at this time of year, especially if you have high expectations of what you want your holiday to be. But keeping the fact that you will have to pay your credit card off at the end and planning your budget ahead of time can help to keep things under control.

Technorati Tags: credit cards, credit card use, holiday spending, holiday budget, personal finance, christmas shopping

You get a phone call about your credit card. It’s your credit card issuer, and they’re checking up on your account. Maybe there’s a transaction they want confirmed.

Is it really them, or is it a scam?

It can be hard to tell. Credit card companies do sometimes call when there has been unusual activity on your account. In my experience, this is an automated call rather than a human.

However if you get a call from someone saying they think that there has been fraudulent activity on your account what do you do? Do you give them the information they ask for? Even if it’s that little 3 digit code on the back of your card because they say they want proof you still have the card in your possession?

I wouldn’t recommend it. That little number is the final piece of information scammers need to do online transactions with your credit card at many websites.

If you get a call like this, the best thing you can do is say you will call the company back, look up their phone number either online or on your bill, and call them yourself. Once you have initiated contact, you know you are talking to a legitimate person, and they can tell you whether or not the first call was legitimate.

If it was not, then you know you should be concerned about whether or not someone has gotten your credit card number. Talk to the agent you called about the call you received. They will be able to help you decide what to do about it.

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The holiday season is fast approaching. Many stores already have Halloween, Thanksgiving and Christmas decorations up and available for purchase.

And for many, ’tis the season for overspending.

I know it’s a lot of fun to be generous to those you love. Giving gifts at this time of year is one of the ways many people show how much they care for their loved ones.

But if you don’t have the money, don’t go overboard.

Remember that it is more important to show that you care for your family than to just give them things. If money’s tight, offer time together instead. The time may well be more treasured than what you would get for overspending in any case.

For older relatives, there’s the time you can spend with them. Promise to help run errands, cook meals or just visit more. The time spent will be like a gift to both of you.

Children may not notice as much how valuable time is when you give them the gift, but you can give them things that they will enjoy year-round. Think about annual passes to local attractions, for example. Theme parks. Go Card USA offers discounts on local attractions, and you can buy Six Flags tickets online.

When you buy gifts, do think of what you can afford. Popular it may be to have a ton of presents under the tree, but how many are really appreciated? How many will still be in use the following Christmas?

Don’t be one of the many people who loads up the credit cards so heavily at Christmas that you have trouble paying your bills later on. There are more important things.

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If you’re carrying a large load of debt, especially if it comes from high interest rate sources such as credit cards, you know how painful it is to pay so much for the money you owe. Sometimes it can even spiral out of control, to where you cannot pay your minimum payments, never mind actually paying them off anytime soon.

And that, in a nutshell is the first harm that carrying debt can do. If it gets out of control, your life can feel like it is out of control. But there’s much more that carrying excess debt can do.

It lowers your credit score

A part of your credit score relates to how much of your available credit you are actually using. If it’s out of proportion, your score goes down. And your credit score determines the APR you get on things that you really have to have credit for, such as buying a car or a home.

It’s hard on the budget

Just think of how much more money you would have to use or to save if you weren’t paying off debts. For many people this is several hundred dollars a month. Wouldn’t you rather be able to use that money for something you want now? Or to be able to save it for retirement or a rainy day?

It makes you miserable

Too much debt is strongly related to being unhappy in your life. It’s stressful.

When is credit and debt appropriate?

All that said, there are times when debt is appropriate. Buying a house or a car, as I said above. But to get the best rates you do need something of a credit history.

This is where a well-managed credit card comes in very handy. Use it. But pay it off or carry the smallest balance you need to at the moment. Don’t overload it. Don’t apply for every single credit card or store card you hear about.

Debt can serve a purpose, but misused it can destroy your life. As much as your personal circumstances allow, don’t let it take your life over.

Technorati Tags: debt, credit, personal finance, credit card

There are a lot of good deals to be had on credit cards right now. But what is a good deal to you may not be a good deal to another consumer. You have to think about what it is you need from your credit cards.

Take the introductory 0% APR deals. They may sound great to you if you have a balance you’d like to transfer over, but for someone who isn’t going to be carrying a balance, who cares? 0% APR means nothing to them.

Then again, which 0% APR really means most to you? Is it better on purchases or balance transfers? What about the balance transfer fee? Will you be saving enough money to chose that card over this card? You really have to think carefully.

For other people, it’s all about the rewards. These cards are best for people who won’t be carrying a balance, as higher interest rates generally easily eat up the reward value. But which reward is best depends on your shopping habits.

Sometimes it’s the gas rewards card. You earn rewards on shopping in general, but higher rewards at selected gas stations.

For others it will be the travel rewards card. You’re going places and the card helps cut your costs.

Of course, anyone carrying a balance wants a lot interest rate in the long run. It just makes sense. And there are plenty of credit cards out there offering just that. Some require better credit than others, but so long as you have a reasonably decent history, you can get a fairly low rate in many cases. It may be a matter of asking your current credit company for it, or it may be a matter of applying for a new card and moving things over. At the very least, if you are pretty sure of being approved there is little enough harm in applying for a credit card with a better interest rate.

The big thing to watch out for are the other terms. Annual fees are not too hard to avoid these days, but you should definitely be on the watch for them. You’ll also want to know what happens to your APR if you miss a payment. These things can become extremely relevant rather unexpectedly. There’s no good reason to be caught off guard.

There’s no reason to settle for the first credit card application that falls into your mail slot. Do your research and figure out what is really going to give you what you want from a credit card. You’ll be much happier with it in the long run.

Technorati Tags: credit card selection, compare credit cards

Debt is a frustrating thing. It can get out of control so easily at times, yet other times it’s so utterly vital. How else would most people buy a home or a car?

But most people don’t have debt spiral out of control just due to one or another of those. They can indeed buy more house than they can afford, and agree to a risky mortgage scheme, then lose the gamble, or perhaps get into money trouble from a job loss, but many people get into uncontrollable debt just due to their credit cards.

Credit card debt is painful. It’s expensive. It can feel like a trap. And it can be very hard to get out of.

But you can get out of debt, and in many cases you won’t need to file bankruptcy or consolidate your debts. Sometimes those can’t be avoided, but often you can do it on your own with sheer determination.

Start by calling your credit card companies and seeing who will lower your interest rates. The lower you can get your interest rates, the better.

Next, take all but one out of your wallet and put them away. Most people find it too inconvenient to give up the convenience of credit cards, and so I won’t expect that of you.

But you do need to get your spending habits under control. As much as possible, pay cash. A lot of people find it helpful to budget using envelopes of cash, and taking that when they go shopping. You can’t go over budget if that’s all you have available.

Now pick a credit card to pay off. Some people pick the highest balance, others the highest interest rate. What’s important, however, is that you focus your energies on paying off that one card.

Pay just the minimum on all your other credit cards. But on the one you’re trying to pay off, pay as much as you can reasonably manage.

What? You can’t manage more than the minimum on any of your credit cards? You’re in deep.

But it’s still not impossible. What this means is that you are living beyond your means. You need to cut back.

Way back.

Let’s get real here. Cable television is a nice convenience. It is not a necessity of living. If you’re having trouble paying your bills, cut it out.

Ditto internet. You’ll have to rely on the computers in the library or go with the cheapest dialup connection you can get. Not fun, but doable.

Cell phone. Regular phone. Do you really need two?

What’s your favorite place to stop and get something to eat or drink? Are you doing that too much?

Are you eating out too much period? You can bring lunch to work, you know.

Keep looking for cuts like that to make to your budget. If you can simplify your way of life you stand a better chance of getting your debts back under control. You’ll feel much better for it.

Technorati Tags: uncontrollable debt, debt management, paying off credit cards, debts

Choosing the right credit card is not as simple a process as it may appear as you sort through the stacks of offers you get in the mail. The simple truth is that what you get in the mail may not be the best offer for you.

Sure, they’re preapproved. That actually means very, very little. Preapproved pretty much means they have your name, and might approve you for one of their offers. It’s not a guarantee that you will get the offer mentioned in the ad.

The rates these ads show may or may not mean a lot. The teaser rate is generally temporary, lasting anywhere from a matter of months to a year and a half. It may or may not cover purchases. Often enough these rates are just for balance transfers.

After the teaser rate expires, you’ll be paying a higher rate. Just how much higher depends on what you qualified for, not just what was mentioned in the ad.

If you’re going to be carrying a balance, this rate matters tremendously. It is what the regular cost of the credit card will be to you. A low or zero APR is nice, and you can certainly make more progress on paying off a balance during those times

Points and other rewards can be very tempting. You should try to get them only if it really makes sense for you to do so. Many have higher interest rates, and what you get in rewards simply does not make up for it.

On the other hand, if you aren’t carrying a balance, and want a credit card for the convenience of it, a rewards card makes a lot of sense. You may as well make the most of the money you are spending.

In that case, you want to choose the rewards that will make the most sense for you. Cash, points, travel, gas… whichever you will really appreciate.

Unless you have a particular reason for wanting a given card, it is probably not worth it to pay an annual fee. There are too many great offers out there for this to be necessary for most people.

If you’re serious about getting a new credit card, start checking out the online offers, not just what you get in the mail. The range is much more impressive, you might find something better than what you got in the mail, and applying online is less tedious than filling out a form by hand.

If you’re tired of receiving credit card applications in the mail, in fact, you can request a stop be put to them. You can call 1-888-5-OPTOUT, give your name, phone number and social security number, and get taken off the lists. If that’s not comfortable to you, you can write to the individual credit bureaus and ask to be removed from their marketing lists. These are the places that the credit card issuers get your information to send you all that junk mail in the first place.

Mail your requests to:

Equifax, Inc.
Options
PO Box 740123
Atlanta, GA 30374-0123

Experian
Consumer Opt-Out
701 Experian Parkway
Allen, TX 75013

TransUnion
Marketing List Opt Out
PO Box 97328
Jackson, MS 39288-7328

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