The,Proper,Use,Credit,Cards,Cr finance, share, loan The Proper Use Of Credit Cards

If your financial problems have reached the point where you do not see a way out and you feel as though you are drowning in debt, your best way out is through declaring bankruptcy. Filing may well allow you to get your finances back on track Thankfully, there are now several web sites that are there to help people like you with bad credit to find the fast personal loans that you need. When you have bad credit, the first thing that you should be looking for is a loan company that

Credits cards are a convenience, not a crutch.Credit cards are a great way to make purchases and record tothe penny your spending. They also provide a way topostpone payment on items and thereby earn more interest onyour money.For example, if you have a money market account that givesyou 5% annual interest and you spend $1000 a month throughyour credit card, you can keep that $1000 in your moneymarket account for an additional month. At the end of ayear you would have earned an additional $51.16 for doingnothing.Now $51 may not be much but it's free!Also you can use your credit card statements to keep trackof exactly how much you are spending and where your moneygoes. With some credit cards you can use personal financesoftware to download your credit card transactions from theInternet right to your home computer.Credit cards may actually save you money. Some people avoidmaking purchases if they do not have cash. Cash seems to"burn a hole" in our pockets, it just disappears. It is soeasy to spend and it is right there. But a credit cardtakes more effort and you know that you have to pay the billlater that month.Your credit card may also offer a rewards program where youget cash back, frequent flyer miles or discounts on servicesand merchandise.Credit cards are convenient. Some purchases, especiallythose on the Internet, will only accept credit card payment.Also you don't have to continually go to the bank or ATM toget cash.A credit card also provides a measure of safety. You don'thave to carry large amounts of cash for large purchases.Even if your card or credit card number is stolen, you arenot responsible for the thief's use of your card.But credit cards can also be a crutch. Too many people seetheir credit limit not as the maximum amount of debt theycan go into, but as an account full of money that they canspend.Average household consumer credit balances have now topped$7000. The monthly interest charge for a credit cardcharging 18% interest is over $100. More than $1200 a yearjust in interest.And this interest is not like home mortgage interest thatyou can deduct from your taxes. You are paying anadditional 15-36% on top of the $1200 for taxes on theinterest you are charged. That brings your interest chargetotal up to $1400-1600 each year. Even more if your balanceor interest rate is higher.What is silly is that many people who are paying 18%interest rates on credit are also investing in a stockmarket that only averages 11%. Or worse, keeping money inmoney market, savings accounts or CDs that only pay .5-3%.Want an investment that returns over 20%? Invest in payingdown your debts. In the above example you can save over 20%with taxes factored in.Many people have developed the habit of using their creditcards to buy what they want now and paying for it later.They then make only the minimum payments required. Oftenthe minimum payment is set so that you only pay the monthlyfinance charge (interest) or just a small amount above it.This will keep people paying that 18% rate for years. A$1000 purchase can end up costing $1500 when paid off after5 years. Ironically many of these same people will waitmonths for a sale so that the item's price goes down 10-20%and then make a purchase on their credit card and end upgiving the savings to the credit card company instead.Sometimes the credit card can lead a person into living alifestyle that is beyond their means. If a person gets inthe habit of dining out two to three times a week and thesemeals are paid for by credit card, the card balanceincreases quickly. Often the additional expense was notplanned or budgeted. People can even end up spending moreeach month than the actually earn.This can continue as long as the credit card balance isbelow the limit and the person makes their regular monthlypayments. But as soon as the credit limit is reached, manycredit companies will increase the credit limit and give theperson more room to get into debt. I have personally seen acredit card limit expanded by $10,000 within three months.This cycle can continue until the person is required to makea minimum payment that is more than they can afford. Nownot only do they have to cut back on the lifestyle they havegrown accustomed to over the years, but they also have toeither increase their income or cut out things they enjoyedbefore increasing their lifestyle with their credit card.Also what happens if the person is suddenly out of work orhas to take a pay cut or lower paying job. That's right,the credit card bills keep coming. And many people rely onthe remainder of their credit limit to supplement theirincome until they are working again or can find a betterpaying job.We have seen this cycle in America increase average creditcard balances each year and eat up the equity in manypeople's homes. Home equity loans are used as credit cardsto live a lifestyle that is beyond people's means. Or topurchase toys they really can't afford to buy let alone keepand use.Or the home equity money is used to "pay off high interestcredit card debt" as the ads suggest. But then peoplecontinue the habit of living off their credit cards and getright back into debt again.So what is the answer to America's growing debt problem?Abolish credit cards? Nationally imposed credit limits?How about a little old fashioned self-discipline? I know isnot in style anymore but it is still the best policy.Bottom line: pay off your credit card balance each month.Don't buy something now and expect the big end of year bonusto pay off your credit card. Even if you do get it, youwill probably spend it on something else.Don't fall into the habit of living off your credit cards.If you have $1000 of disposable income to spend each month,whether through a credit card or in cash, only spend the$1000. Don't try to make up for extra expense this month byassuming you can catch up on your credit card payment nextmonth. It won't happen.If you have developed bad credit habits, cut up your creditcards, or only keep one for emergencies and resolve to payoff the balance each month. Then create a plan to getyourself out of debt and stick to it.You can relieve stress, avoid family conflicts and sleepbetter at night knowing that there are no credit card wolveshowling at your door. Article Tags: Credit Cards, Credit Card, Many People, Credit Limit