How To Avoid the Credit Card Debt Trap
By Lyn Bell
There is a lot of truth about people ruining their credit score rating due to missed payments and paying their credit card bills late. Fees pile up and interest payments grow, and before you know it its all out of control. After a while you may not even be able to pay the minimum payment amount.
If you don’t do something fast - it could be the beginning of the end.
To make sure this don’t happen to you, always pay your bill on time, and always avoid missing a payment. Naturally it is best to pay the account in full each month to avoid interest charges – after all credit cards are normally one of the most expensive means of financing debt because of the high rates charged.
Sometimes, it can be hard to make your payments on time, although you should always do everything in your power to ensure that you stay on top of things. Below, you’ll find some tips to help you with your credit card payments.
• Always pay your bill on time. If something comes up and you aren’t able to pay, you’ll be penalized. Late payments mean you will be charged interest for the full month. Although you may think that the reason that has come up will justify a late payment, it doesn’t justify a late payment in the eyes of your credit card company. Pay where and when you are supposed to pay - and do it on time.
• If you simply aren’t able to pay your entire bill, you shouldn’t worry about it but instead pay the minimum amount. Even though you may be able to pay more at a later date, you should always make sure you pay at least the minimum. You can always add to your minimum amount by making an additional payment later. But beware as you will still be charged interest for the month.
• The best way is to always have at least the minimum payment amount set aside, so that you have it available when your credit card bill arrives. Prepare a budget and make sure you include the minimum payment for the limit on your credit card. If you are budgeting you should be allowing for payments that you no doubt spend on your credit card i.e. clothing, gifts, entertainment. This way you will have your minimum amount plus your spending amount available as a payment.
• You could check if your credit card company allows a payment ‘holiday’. This service will allow you to request a waiver regarding your payment when something urgent comes up and you don’t have the money to pay your bill. Make sure that you use this service wisely as there will be a limit to the times you can use it. Ensure that the situation is truly an emergency and there are no other options available for you. This service will normally have a cost as well as interest payments, and you’ll need to pay it the following month.
Used wisely credit cards can be great for budgeting and deferring loan payment interest but you need to pay it off in full each month to avoid interest charges. To learn more contact Lyn.
You should always know what your interest rates are and have a good idea of what your bill is going to be before you make a purchase. So many times, those who have credit cards make purchases, knowing they can’t make the payments - then suffer when they get the bill and aren’t able to pay it. This is called instant gratification and a dangerous way to use a credit card.
Remember that if you simply aren’t able to make your payment, you should contact your credit card issuer immediately and see if you can work something out. It’s no use burying your head in the sand and hoping it will all go away.
When you have a credit card, you should always make sure that you have the money to pay the bill, or at least the minimum amount, the minute it arrives. You will normally have a couple of weeks notice before the payment is due – make sure that you do not go over this payment date. This way, you’ll remain in good standing with your company and your credit score will be undamaged.
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How to Rebuild Your Life and Your Credit after Divorce or Separation
By Lyn Bell
Whatever it may seem like right now, your life is not over when you are going through a divorce or separation – but you are likely to be in for the ride of your life. There will be bumpy roads ahead, but you have to make sure that you are able to take the challenge head on. Make sure that you are ready for the ride that is ahead and make sure you know what you need to.
You will need to think about more than just the emotional support that you need when you are going through a divorce or separation – you also need to worry about your own finances. Firstly, you will want to have a good credit ranking so that you are ready to get on with life on your own without the extra burden of a bad rating. You need to make some wise decisions about your finances to keep your life together and on track.
Start with your credit cards and find out how to keep them in control.
Make sure that you cancel credit cards that are in both you and your ex partner's name. You will want to make sure that you terminate these as a priority so that you are not going to have any battles over charges and amounts owing. Remember that you are both responsible for any balances owing in both your names – i.e. joint accounts. This is called ‘joint and several liability’. If you are unable to pay the debt immediately a block will be placed on the account so that neither of you can incur further debt.
Make sure that you get rid of credit cards that have the highest interest rates. You may be surprised to find that store cards can often be found in this category.
Control spending by setting up a budget.
Think very carefully before you decide to use your credit cards on some of the items that you purchase. Make sure that you are in need of the purchase before you decide to make the transaction. You will want to ensure that you have the ability to pay the amount, or at the very least to pay the minimum amount.
You will need to contact all of your creditors and make sure that you inform them that you are divorcing or separating and that you do not want your ex to have access to your accounts. Usually you will have to close current accounts that you have in joint name. You will both need to sign the closure and if the account is in credit this is divided between you. If you cannot agree a block will be placed on the account so that neither of you can have access.
The bank can arrange for you to have a new account set up so that only your information appears on the account. This will help you keep track of your credit and make sure you are not going be responsible for any purchases that are not yours.
You will need to start building a new credit rating for yourself. You will want to make sure that you make the right choices to keep your credit in good standing and create a new path so that you can get on with your life.
Old credit cards and loans will need to be paid off so that you are starting with a fresh and clean slate – remember you are ‘jointly and severally’ liable for joint debt. Hopefully you and your ex can agree on a strategy to get this debt out of the way. Allow for loan payments in your new budget.
It is a good idea is to open an account and start saving some money for yourself – consider that you are ‘paying yourself first’. Get into the habit of putting a little bit of money away each week or month so that you can start building up your good name. This will be a great help for you later when you may try to open up accounts for credit cards or apply for a loan to make a purchase such as for a home. Paying yourself first will also help you build a stronger financial security net for yourself.
Try to keep on track as much as possible. Avoid buying anything that you do not need and keep your spending to a minimum – remember that budget! Once you have achieved your goal of building up your credit rating and getting back on the right track, you will start to see your way to a better and more secure financial future.
Contact Lyn for a personal interview to get your financial life back on track.
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