Credit Card Debt Solution
How Much Credit Should You Have
Credit counselors often advise that you spend no more than 15%
- 20% of your income after taxes on short-term (typically 12 months
or less) credit purchases, such as credit cards and lines of credit
(short-term credit does not include your housing costs). If your
monthly income after taxes is $1,000 for example, you should have
credit payments of no more than $150 - $200.
Warning Signs of Too Much Credit Debt
If you answer yes to any of the following questions, you might be
heading into dangerous credit territory.
- Do you need to use credit to buy everyday necessities like groceries?
- Do you have to borrow money to pay your current bills?
- Are you have trouble paying off your credit card balances each
month?
- Do you have difficulty saving enough to cover expected expenses?
- Are your credit cards "maxed out" to their full limit
so there is no room to cover emergency expenses?
Simple Solutions to Keep Your Credit Card Debt Down
-
Don't charge your purchases if you are unable to pay
off your credit card bill.
Paying cash or using a debit card is a great way to keep your
credit card debt low. Adding charges onto a credit card that you
cannot afford to pay off is a surefire way to get into debt over
your head.
-
Don't borrow more than you need.
While it would be nice to borrow extra money in order to afford
more luxury items, it isn't the smartest idea when you're looking
for a debt solution. Until you're more cogniscent of how much
debt you can handle, only borrow the amount you need and are able
to pay back.
-
Understand the costs of credit.
Make sure you know what your interest rate is along with any other
fees associated with each of your credit accounts, including late
payment fees.
-
Shop around for the best deals.
Interest rates, fees, and other payment rules vary widely. Make
sure you do your homework and find a deal that fits into your
budget. Some people prefer testing purchases in the physical stores,
then purchasing the same product online for further discounts.
-
Keep on top of payment schedules and credit limits.
Late payment and overlimit fees can add up. In addition, it could
seriously impact your credit rating, which can sometimes increase
your interest rates on major purchases. You could end up paying
far more than you borrowed.
-
Emergency credit cards should be reserved for actual
emergencies.
Think about how much you really need something (versus just wanted
something) before you charge it on your emergency credit card.
