The Truth About Credit Card Debt
Life was a lot simpler when what we honored was father and mother rather than all major credit cards.
Robert Orben
Well said! Orben, in case you don’t know him (I didn’t) is an American comedy writer who also worked as a speechwriter for former president Gerald R. Ford.
While we may all agree that life, back in the day, was indeed simpler, the fact of the matter is that credit cards—plastic money—is here to stay. With that in mind, it is VITAL you develop sound strategies for creating a solid credit history, and that starts with using your credit cards in a wise manner.
What is wise?
Ask 20 people, and you’ll likely get 20 different answers.
One thing is certain: carrying credit card debt isn’t in your best interest.
According to the Federal Reserve, the average household owes $7,128 on their cards, but there are “indebted households” where the average outstanding balance is $15,279. This information was found on the NERDWALLET.com website.
And yep, I meant to make than pun because that’s what you’ll be paying INTEREST — not earning–when your credit card debt is beyond the range where you can pay it off monthly. A good goal is to have your money work for you because I am pretty certain you very hard to earn every penny …. I know I do.
Essentially, it’s important to take a look at your fiscal reality and start living within your means.
Don’t misunderstand, there are times when carrying debt is a great strategy. How many among us could afford to buy a home outright? Or a vehicle? Or pay for a college education? Paying interest isn’t an evil … paying unnecessary interest is. OK maybe evil is a bit strong, but really like I said before, I want my money working for ME!
If you like to use your credit card to pay for gas, groceries and all sorts of other “needs” to help you earn rewards that can then be used for other purchases, GOOD FOR YOU … that is a great strategy PROVIDED you plan to make the full payment when the bill comes due.
Paying only the minimum amount due sets you up for treacherous times ahead. You eventually will pay the piper, as they say. The goal is for you to be in control of how you “borrow” and pay back that money.
Most credit card companies are fine with you paying the minimum. They get to keep and use your money so it’s working for THEM. PLUS, you’re paying for that privilege with your hard earned money by paying them interest. It’s a win win for the credit card companies.
Even when you pay off your debt in full each month, the credit card companies are still making money. As well they should … they are providing a service. And don’t forget, most retailers/companies that accept credit cards PAY a fee for accepting credit cards (that’s why some businesses will extend to you a discount for paying cash because it saves them money).
Here are FIVE tips to help you use your credit cards in a smart, strategic manner that will benefit you and your bottom line:
o Cut up cards you don’t use often or that you got because you were going to save 15% off your purchases. Get rid of them. It’s good to have credit, but having too many cards can raise flags.
o Get a card that provides rewards, like the STJ VISA card. You can then use those rewards to help with other purchases.
o Keep track of your purchases; mistakes happen and while you’d like to think when they do, someone is going to tell you about it that is not likely. MAINLY because nobody cares about your money quite like you do … so keep a vigilant eye on all your transactions.
o Set a limit for what you can afford to charge so you’re not getting surprises when the bill arrives.
o PAY IT OFF IN FULL each month. Even if it means dipping into a savings account to do so, you should pay that bill off every month.
IF you are feeling overwhelmed with your credit card debt, CALL or stop in one of the St. Joseph’s Federal Credit Union locations and talk to a member services representative to learn more about how they can help you with your credit card debt. If you’re paying the minimum, now is the time to embrace a new way to manage your credit. Seriously, go to STJ to learn how they can help.