|
Credit card offers can be very tempting, and we certainly get enough of them in the mail everyday. Even people with poor credit scores are inundated with these "pre-approved" offers.
Part of the allure of credit cards is the belief that you need one, "just in case." As a result of such thinking, these offers are not discarded as they should be. Instead, you keep one or two to look at for those "just in case" situations. Credit card companies are masters in the art of temptation. They can draw you in with promises of incredibly low APRs, zero percent balance transfers, and more. Plus, who wouldn't want a card that you could personalize to fit your style? Recently, many credit card companies offer to design a card just for you, making it even more irresistible. You may apply with the intention of using it strictly for emergencies. Isn't that a safe and responsible thing to do, you say to yourself. While you wait for your card to arrive, you fortify your intention of using it only when absolutely necessary. You won't borrow money to pay for extraneous and unneeded items. You won't be tempted by the personalized card, the great rates, or the high balance. You'll use it for necessary items and pay the balance each month. When it arrives, you check out the terms and activate it. You then put it into your wallet - for emergencies only. When you have a new credit card, you can feel financial worries lessening. Suddenly, you can buy things that were out of reach only the day before. But you won't overspend and you will always pay on time, you continue to tell yourself even as you head to the mall. It is easy for your good intentions to be thrown by the wayside, and the consequences of credit card spending can be unpleasantly reiterated when you get the first bill. And so you enter the cycle of debt in earnest. Instead of paying off the entire balance, which you told yourself you would do each month, you pay a minimum payment. Instead of cutting your spending, you continue to use the card and pay only this small amount. You are driving yourself deeper into debt. Soon, your credit card will have reached its maximum balance. This can leave you in a financially vulnerable position, so you get yet another credit card. Without changing your spending habits, however, you are just perpetuating the problem. Soon, you have to maxed out cards and are making only minimum payments on each. Now you are buried in debt, and to make it worse, the low, tempting APR rate has expired. You may go from zero percent to in excess of twenty percent. If you miss payments, it continues to climb. Your debt grows on its own, even if you stop using the cards. As you continue this cycle, your credit report feels the consequences. You make plans to pay off the entire balance with tax refunds or bonuses. But these get sucked up in everyday purchases, and still your debt grows. Your credit card bills take a backseat as you struggle to pay your mortgage or rent, utility bills, car payments, and more. You get notice after notice, and soon collection agencies are on your tail. You feel threatened and scared but have no idea what to do. The only way to help yourself is to radically change your spending habits. Cancel the cards, even if you still have room to spend. If you absolutely need one, do not carry it in your wallet. Better yet, get a debit card, which gives you the freedom and convenience of the credit card without the high risk. If you do decide to keep one card, make a concerted effort to pay it off in full. This may mean making some sacrifices, but it is well worth it to dig yourself out of debt. Use if for emergencies, but make sure you have a clear definition of emergency. A great sale on shoes is not an emergency. Fixing your car so you can get to work is. While your first instinct is to ignore creditors, you need to speak with them. They want their money and would rather take something than nothing. They will most often agree to negotiate lower rates or a reduced balance in exchange for some type of debt repayment plan. Be honest about how much you can afford to pay. They will work with you once, but if you get in over your head again, they may just pass you on to a collection agency. It is easy to view credit cards as a way to get what you want without having to pay for it. The reality, though, can hit you when your credit score is in shambles and you are getting collection calls. This is real money, and it is your responsibility to repay it. When overcoming debt, it takes time and effort. You can't pay off thousands of dollars of accumulated debt in a week. It will take time. This time, meanwhile, can be put to good use. You can rethink your spending habits and create a workable budget. You may be overwhelmed by the amount of time it will take to become debt free. The truth is that you cannot afford not to become debt free. Continuing with your current habits will only make matters worse. It may be easy to rack up the debt; paying it off takes more control, effort, and persistence. If you want meaningful credit repair, you need to acknowledge the problem and make a concerted and real effort to correct it. You can start little by little to restore your credit. The first step, though, is to be proactive and not let it overtake you. About the Author
To learn more about your credit score, visit the free credit reports website to determine where you stand, then get your free credit score and get yourself back on track. |
