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If you need to use a credit card to pay for simple everyday things, you’re already in financial trouble and should not attempt to get one. Transferring balances and skipping one bill to pay another bill is another great example of how not to use a credit card. Frequent transfers and missed payments are a red flag to the credit card company and they will take advantage of the situation. Credit cards should not be used to charge more than you can pay. That big screen tv or vacation to paradise may be tempting, but if you can’t afford it now, you can’t afford the interest that will build up for the next bill. A maxed out credit card will get you nowhere but a trip to meet with the IRS and bankruptcy staff.

“Oops… I think I went overboard and need help with my credit cards. I’ll never be able to pay this off.” Many Americans are facing this tragedy and need support with their spending habits but have no idea where to begin. So, what should you do if you start to feel credit card debt? Stop using your credit cards! This is the most important step and several people just cannot put the cards away. Should you have problems putting your cards down, cut them up as you will probably not be able to use them for a long time and at this point the best option is to cancel the card when everything is paid off. Next, get a higher paying job or apply for another job, any bit of money you can get will be deemed necessary for the credit card bills.
If you have problems scheduling your everyday life to focus on the necessities, work with a reputable counselor to maintain a monthly budget. Also, negotiate with your creditor to decrease your APR and pay as much as you can afford on the bill. A final attempt to pay the bills off would be to ask family and close friends if they would be willing to help you back onto your feet. The last resort for going into credit card debt is to file for bankruptcy. Bankruptcy is the inability to pay creditors and penalizes your personal credit for 7 years with the inability to buy major necessities like a house or car. 

What’s the best way for me to use my credit card without having to worry about debt? Start out by giving yourself a budget by keeping tabs on everything you have purchased with your credit card, the bill should not surprise you when it comes in the mail. Next pay as much as you can afford to the creditor. They will show the full amount you owe as well as offer a monthly minimum. This minimum will add up over time and is not always the best solution. Another great tactic is to only use your credit card as an emergency back-up plan and know much you want to spend before you get to the check out counter. NEVER miss a payment and avoid the maximum limit at all costs. Finally, when the bill shows up in your mailbox, check all of your transactions for any charges you may not have charged. If you notice anything suspicious, call your creditor immediately and ask about the credit card purchase. 

Well… is a credit card for you? If you can follow all the steps with no worries on your financial status, I’d say that a credit card would be something you could look into. If you would like a credit card but can’t be certain that you could continue with payments in an orderly manner, hold off until the time is right and you are positive you can maintain control of the credit card. Do some research about each credit card company and find the one that suits you best and avoid the annual fee creditors. Keep everything in line, stay with 1 good credit card and you will see that your credit score will increase over time.

This Financial Services article was written by Colby Almond on 3/31/2010