If you stop and consider that the global rate of credit card ownership and 72 percent, the current world economic situation falls into some perspective and how everything came to be becomes a little clearer.
And while many people will blame credit card companies, it’s important that each person taking out a line of credit is aware of what they’re signing up to and whether it is aligned with their needs. To help you in this regard, below are some tips.
Assess Your Current Situation
This doesn’t mean that you shouldn’t have more than one credit card at a time or that you have to give up your shopping addiction to the Groupon Coupons page for Barneys New York, but it doesn’t mean that you should know whether or not you can realistically manage multiple lines of credit before you take them out.
For this reason, it’s important to stop and take note of your current financial position and make it formal with a budget or a finance tracking service so that you have a clear understanding of your incoming and outgoing finances and how much extra you have each period.
Combining all of your debts from multiple sources is a great idea if you are struggling to keep up with a range of monthly payments and are paying off nothing but your interest each month. However, they can also be a double edged sword.
If you decide to take transfer all of your debts into one large line, it is important that you finalize any of the transferred debt. This means that if you transferred money from a store card then you should cut the store card up or return it to the store. If you are moving debts from a credit card, notify the issuer to cancel the card and also cut it up. The reason why this is so important is that you can easily grow your debt with these additional and available lines.
Of course, you should always read the fine print when taking up any line of credit, particularly a balance transfer offer. The reason being is that most of the low rates that you see advertised are for a limited time only. This means that, if you don’t clear all of your combined debt within the set period then the interest rate on the entire debt will rise. Often, it rises to levels on par with or higher than average interest rates, meaning that if you don’t pay it in full by the end of the promotion, you could find yourself in the same position again.
Utilize Your Rewards
If your credit card comes with rewards, use them! Whether it’s two movie tickets for the month, a $20 cash back for using your card at a preferred retailer, or even an affordable flight upgrade to a business class ticket for your next vacation, if it’s on offer, use it! If, when looking through the available options, you realize that the rewards program you are subscribed to doesn’t offer anything that interests you, don’t be afraid to shop around for other programs which can provide more appropriate benefits.
When it comes to debts and managing your finances, the best way forward is forward. This simply means that, if you find yourself in a position of debt, don’t hide your head in the sand and hope that it blows over. Take control of your financial situation and take steps to change it for the better.