Master Your Card

Dig Your Way Out of Credit Card Debt

JE Cornett — Tue, 07 Feb 2012 00:28:30 +0000

If you’ve made getting out of credit card debt one of your New Year’s resolutions, but still haven’t made any inroads yet, don’t give up yet. It’s easy to become discouraged with your chances of paying off your credit cards, or to become so confused by conflicting advice that you’re unsure how to begin. Don’t get disheartened. You can make a dent in your credit card debt this year — but only if you’re committed to doing so.

There are a million different credit card repayment strategies and debt payoff schemes to help you dig your way out of credit card debt. When it comes to the bottom line, it’s pretty simple: pay more than the minimum payment to reduce your debts.

While that may seem like simplistic advice if you’re drowning in credit card debt, it’s true. Until you can pay more than your minimum payment, you’re barely reducing your balance — you may be paying off interest, but making little headway in reducing the debt. And if you keep spending, or miss a payment, that allows your debt to continue to grow.

That being said, there’s more than one way to attack that balance. Here are a few of my favourites:

Plead Your Case With Your Credit Card Company

If you’re having trouble making your credit card payments, or can only pay your minimum balances, you may be able to negotiate a deal with your credit card company. Before you attempt to do so, though, be ready to plead your case by letting your creditor know why you can’t pay as agreed. Unemployment, extended illness, natural disaster — anything that’s affected your life and therefore your ability to pay is important to note. Ask your creditor for any special repayment options they may offer, such as lowering your interest or giving you a period of time with no interest due.

Allocate Your Funds Wisely

One of the simplest ways to reduce credit card debt on multiple cards is by paying more toward the balances with the higher interest rates. Make more than the minimum payment on the card with the highest balance, sticking to the minimum payment on the remaining cards. When the biggest debt’s paid off, do the same with the card with the next highest balance, and so on until you’re done. This may work for you if you have cards with varying interest rates; if all your cards are high interest rate cards, then start with the card with the highest balance.

Transfer Carefully

Using low- or zero-interest credit cards to pay off high-interest cards may help you cut your credit card debt drastically, but only if you tread carefully. Make sure that the card offers the low- or zero- interest introductory rate on balance transfers, and that any balance transfer fees are low enough to make it worth your while. Then, pay as much as you can off the debt during the introductory period, because, when it’s over, you’ll be charged interest on the remaining amount.

Earn More, Spend Less

The only sure-fire way to safely pay down your credit card debt is to earn more and spend less, so that you have more money to put toward digging your way out of credit card debt. However, this is easier said than done, but if you’re dedicated to getting out of debt, it’s possible.

Take on a second job or odd jobs, and put all or as much of your earnings as possible toward your debt. Cut your spending to the bare minimum, and apply the savings to your debt. Yes, you’re sacrificing both your time and creature comforts, but the result is knowing you’ve conquered your credit card debt.

Image by Images_of_Money

Tips for Credit Card Comparison Beginners

Sally Aquire — Thu, 02 Feb 2012 21:21:32 +0000

Not all credit cards are created equal, so it’s important to compare credit cards to make sure that you’re choosing the right one for your needs. It can be confusing to know how to compare credit cards, especially if you’ve never taken the time to do so before. Here are some things to consider.

What Do You Want from Your Credit Card?

There are various types of credit cards, so you need to think about what you’re looking to get from your choice and pick the right card for your needs. You also need to factor your money management into this. For example, do you make a point of paying off your balance in full every month? If you do, you’re not necessarily going to be after the same type of credit card as someone who is regularly carrying a balance over to the next month.

Credit Card Interest Rates

There are three interest rates to be aware of:

Balance transfer fees and interest rates which apply to debt being carried over from another credit card
Purchase interest rates which apply to purchases made using the credit card
Cash withdrawal interest and fees which apply to cash withdrawals made using your credit card at ATMs.

Many credit cards have introductory interest rates which revert back to the regular rate after a certain amount of time, so it’s important to check whether this is going to be the case. If you’re not necessarily intending to use your credit card straight away, look for one that is offering a low interest rate all the time, rather than one which only has low interest for a certain time period.

Interest Free Days

How long a time will you have between making a purchase and needing to pay for it? Typically, it is somewhere between 30 and 60 days. If you’re confident that you’ll be able to pay off your balance relatively quickly, a credit card like this may allow you to budget your spending without incurring extra credit card charges such as interest and fees.

Not all credit cards may have an interest free period on new purchases, though. There may be higher fees and interest rates on credit cards that offer a longer payment period but if you always pay your balance before it incurs any interest, this shouldn’t affect you.

Credit Card Fees

Some credit cards have an annual fee, which isn’t always a bad thing. Some credit cards that charge an annual fee may come with more attractive interest rates, or more appealing rewards, so don’t dismiss them out of hand.

Other fees to look at are cash transaction fees if you use your credit card to make cash withdrawals, and foreign transaction fees if you may be using your credit card abroad at any point. Watch out for any other credit card fees or charges, which won’t necessarily be prominently advertised. You should be able to find the small print on the credit card provider’s website or other documentation.

Credit Card Rewards

If you’re in the habit of using your credit card regularly and paying off your balance in full every month, interest rates are less of a factor, and you may be more interested in a credit card that rewards you for using it. However, rewards credit cards may have higher interest and fees attached. Rewards can come in a variety of forms, but points can often be redeemed for goods or air miles. Check if there are any restrictions on using these rewards.

Credit Card Fraud Protection

Check also whether your desired credit card offers protection against identity theft. Credit card fraud is becoming more and more common these days, and you’ll want to know that your credit card company will help you get things straightened out if you’re affected.

If you’ve never previously taken the time to compare credit cards, it’s definitely worth the effort to make sure that you’re choosing a credit card that suits your needs. Going for the wrong type of credit card may mean that you end up paying more in interest and charges in the long term. Think carefully about your typical approach to money management and let that influence the type of credit card that you opt for.

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Master Your Health Insurance

Brian — Mon, 30 Jan 2012 22:17:58 +0000

How well are you mastering your health insurance comparison? It is possible that you are ignoring some key items that could help you save money. Follow along as we examine your health insurance from a number of perspectives.

How Well Do You Understand Your Plan?

It is surprising to see consumers set themselves up for the disappointment and expense of a denied health insurance claim. In most cases it isn’t as a result of a bad policy, a bad insurance company, or some other error – it is in lack of understanding.

One of the most important things for your relationship with your health insurance policy is knowledge. It sounds simple, yet you may think there is too much to learn. However, if you don’t, how will you know how to use your plan? Take the following examples to test your understanding of your private health fund:

What happens when you seek health care from outside your insurer’s network – what will you have to pay for a doctor, emergency room, or specialist when this occurs? Is there an easy way for you to find the closest treatment facility when you’re away from your network?
How does your plan work with regard to your children, if you have a family insurance plan? Will their coverage end when your teen gets a full-time job, reaches a certain age, or some other milestone?
Have you ever read through your whole policy? When we say this, we mean every word. Do you have questions about it that are still unanswered?

Health Insurance Improvement

Are you happy with your health insurance policy? Are there some things that you would like to change about the plan, such as lowering the premiums or adjusting the coverage? You should re-evaluate and compare health insurance policies to your needs once a while (every six months is a good rule of thumb). Take care of the many items that can be approached:

Your health insurance needs may have changed. Alternatively, there may be changes in you or your health; if you don’t inform your insurer, you could run a risk of having future claims denied.
There may be opportunities for discounts or lower premiums. Just like you should with other insurance products such as home insurance or car insurance, talk to your insurer or agent about those that may be available.
Consider other ways to save money. For instance, to battle possible increases in car insurance rates, consider paying your premiums for the next year at once. You can often avoid a service fee for such a transaction.

Master Your Health Insurance Comparison

There are so many areas in which you can progress concerning your health insurance comparison:

Increase your understanding of a policy
Save money on your health insurance
Know when it may be necessary to change your plan – which may save you money or adjust your coverage appropriately
Compare your existing policy to those from other insurers

The list could go on. However, the point is this: don’t ignore your health insurance. Few insurance products are “set and forget it” items. You have to work on it from time to time, ensuring that it fits your needs, fits your budget, and so forth.

Are you the master of your health insurance?

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Credit Card Introductory Offers: Zero Interest on Purchases

Brian — Thu, 26 Jan 2012 21:34:16 +0000

Need to make a big purchase? Along with introductory zero interest balance transfers, you may be be able to take advantage of a 0% APR offer for credit cards. Follow along as we take a look at some options here along with advice about how to use them.

Some 0% Purchase Interest Offers

Maybe you are ready to look at credit cards with a 0% APR period on purchases. If that is the case, consider some of the following cards.

One of the longest 0% APR periods I found in a quick online search was from Citi, on several of their credit cards including the Citi Platinum Select Visa/Mastercard, Citi Simplicity Card, and Citi Diamond Preferred Card.

The Capital One range of credit cards may also offer a lengthy 0% interest period on purchases to new customers. There are several other credit cards that offer an introductory 0% APR for 12 months. Indeed the latter period seems to be the standard.

In the ever-changing market of credit card offers, there may be new promotions every day offering special interest rates for limited periods to new customers. However, make sure you compare credit card offers to see what is the preferred option for you. After all, there might be some rather long interest-free periods available, but you’ll need to know more about the cards and their terms and conditions before you make up your mind.

Using Zero Interest Credit Card Offers

So, what should you do when you have your new credit card in your hands, with its tempting 0% APR on purchases?

These offers can be extremely helpful when you need to budget for big purchases. For instance, perhaps you are in the market for some new furniture, or you need to finance a wedding. If you could pay off the balance within the interest free period – or at least pay it off in a reasonable amount of time – you may be able to save money with this type of option.

Be careful, though. One risk is that you may not be able to pay off the balance within the promotional zero interest period. Thus, you will take on the standard interest rate for the rest of the time it takes you to pay off those purchases (and the interest you now begin to owe on them). This means you may not end up saving money after all, as you can imagine.

There is another risk, and again it is entirely your own responsibility to guard against this. During the 0% APR period, you might begin to spend more freely, knowing that you won’t be charged any extra – at least, not yet. However, while you think you’re saving money on the interest rate, you may be racking up greater debt overall. Don’t let a credit card get you into trouble; use them in conjunction with budgeting and money management.

Overall, zero interest credit card offers can be a nice way to pay for some shoppers, but they don’t suit everyone. If you start taking advantage of a zero interest credit card offer to make your new purchases, be very careful to keep an eye on your spending. You don’t want to end up in a worse position once that intro period ends.

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How You Think of Credit Makes All the Difference

Sabrina — Mon, 23 Jan 2012 21:24:26 +0000

Across the world, thousands of people every year find themselves drowning in credit card debt. That’s a serious problem, and it is a bad kind of debt to be in. The interest rates are high, and it may seem nearly impossible to dig yourself out. What can you do? Staying out of credit card debt in the first place is a great place to start.

But what’s the best way to stay out of credit card debt? Well, it really comes down to how you think about your card. There are plenty of people out there who have never carried a credit card balance, and there are plenty more who are up to their ears in debt. What’s the difference between them? In some cases, there is an emergency, such as an injury or car repair, that leaves you with no choice but to use a card. In most cases though, credit card debt is a choice.

How to stay out of debt

Getting rid of your cards, or never getting any, isn’t necessarily the answer. Some people may have to if they can’t learn to control their purchasing, but most can learn to use their card responsibly. And if you never get a credit card at all, you’ll miss out on an easy way to build your credit history. In fact, you may find yourself struggling to get any other type of loan if you have nothing else on your credit record.

So what can you do? Change the way you think about a credit card. Simply think of it as like a debit card instead. Would you spend money on your debit card that you didn’t have? Absolutely not. Would you use a debit card to impulse-buy that big-screen television or fabulous pair of shoes if you knew you didn’t have the money to pay for it? No.

An attitude adjustment

A credit card is not a mystic portal to a money tree where you can pick all you want. We need to stop thinking of plastic as non-money. Because when you add the interest you pay onto the price you charge to your credit card, it may be more money than you bargained for. Credit is really just a nice way to avoid carrying cash and build a credit history while you spend; plus it is a very nice option to have in an emergency.

So if you struggle with credit card spending, what you really need to do is realize that when you buy on credit, you’re just spending your own money. And what’s more, you’d better have the money to pay with at the end of the month, or your $500 shopping spree may turn into $570 in what seems like the blink of an eye.

The way I see it, it’s time we gave up continuous instant gratification, rampant impulse spending, and the belief that we deserve to live in luxury every hour of every day. One more cup of coffee, pair of shoes, or video game will not fix what ails your life. Spending wisely and learning to be happy with what you have, however, just might be a step in the right direction.

Image by Jason Bagley

Are Credit Cards Rewards Worth the Risk?

Owen Richason — Thu, 19 Jan 2012 21:54:56 +0000

Imagine that you signed up for the latest credit card offer sent to you in the mail, wanting to take advantage of the appealing, lucrative rewards program. After all, you certainly spend enough to earn countless air miles, and a little holiday would be a nice reward indeed. But you pause just before signing on the dotted line. Is this rewards program really worth it?

Credit Card Rewards Differences

Most consumers know there are substantial differences to credit card rewards programs. There are cash-back rewards, airline miles and gift redeemable rewards programs. Each appeals to consumers in a different way.

Those who travel often will get the most bang for their buck by choosing airline miles or discount fares. Others who do not travel frequently will but rely on their credit cards for regular, everyday purchases will get the most out of cash-back rewards. Consumers who use their credit card sparingly might find gift rewards the best fit. The point is that your lifestyle and spending habits should dictate your choice of credit card reward program, if you choose to use one at all.

The Truth about Credit Card Reward Programs

As with any enticement offered by banks and credit unions, there’s a reason credit card issuers dish out these rewards programs. It’s not just because of their good nature or to spread goodwill among mankind, it is yet another tactic for separating consumers from their money.

Banks and credit unions offering credit cards with rewards are counting on the likelihood that some consumers will overspend to reach their goal of earning those rewards. They are making a calculated bet that consumers will spend more to get more rewards. And that isn’t a good financial strategy for consumers!

The Rewards Game

Sure, spending money to get money back doesn’t sound like a bad idea. It’s almost like paying less for the same item. But those purchases may not equate to eternal rewards as and when you want them. Consumers should read the fine print. That’s where expiration limits and other important conditions are to be found.

Not only do the points eventually expire, making redemption impossible on outdated reward points, but what about other expenses? Even if a consumer spends enough to get a free round trip airline ticket , what about their accommodations or travel insurance? Will those same reward points put extra cash in your pocket to spend while on holiday? Then there’s the cost of meals and car rental – the list goes on. What seems like a good deal might not come to fruition when all the extras are tallied-up.

Cash back rewards may likewise be less of a great deal that they seem at face value. The amount a consumer gets back may be dwarfed by the related credit card interest payments.

Do your research and choose wisely; you could use an online comparison tool to determine which rewards program is the best fit for you personally. You might find several or just a few. If you decide to apply for a reward credit card, be sure not to base your decision solely on the rewards but also on interest rates and fees.

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Credit Card Introductory Offers: Zero Interest on Balance Transfers

Brian — Mon, 16 Jan 2012 21:26:19 +0000

When it comes to saving or spending money, a credit card is a common choice. Zero interest balance transfers provide a potential way to save on the interest charges that plague consumers. But how useful are these offers? And which credit cards are best for this? Follow along for more on zero interest offers with credit cards.

Current Credit Card Offers

At the time of this article, there are a number of credit cards that offer attractive zero interest offers on balance transfers. You might decide to take advantage of these introductory balance transfer rates if you need to manage your credit card debt.

Currently, the best choice for zero interest offers are those that have a period of 21 months. This includes the Citi Platinum Select Visa/Mastercard, Citi Simplicity Card, Citi Diamond Preferred Card, and others that are available. Note that these all require excellent credit, which is what one would expect when approaching the best introductory offers, in this case concerning balance transfers specifically.

Otherwise, 18 months may be the best alternative, as seen with the Discover More Card. The Capital One Platinum Prestige Credit Card is also not a bad option, with the period ending in January of 2013. 12 months on balance transfers is quite common and still reasonable, as you will find with many credit cards.

Of course, these offers are subject to change and this selection does not represent all competitive options. You may certainly find something comparable or better than what is listed.

Usefulness

You may be considering some of these balance transfer offers. Are they worth it? How do you use them effectively?

The big questions can be generally answered, but you must put weight on what matters to you. For instance, if you are worried about saving money on overwhelming interest charges on your existing balance, you might be focused on the interest free period, and not too worried about the interest rate on purchases if you don’t intend to make many.

If you are chipping away at debt, a credit card with a good interest free balance transfer period is worth considering. You might be able to do this with high-interest cards whose balances you are trying to reduce. After all, the difference in interest costs may be quite noticeable if you have thousands of dollars in balances.

A zero interest balance transfer credit card may help you to save on interest charges while you work on your debt. You will need to have a goal, and a plan to meet it, for example a budget and an idea of how much you can pay off that transferred balance during the zero interest period. Be aware that if your transferred balance is still not paid off by the end of the introductory period, you will be obliged to pay the interest rate stated in your credit agreement for the outstanding amount transferred until you have finished repaying it.

Overall, balance transfer offers can be a powerful tool in combating high interest rates. However, be careful in using these offers – don’t let that small minimum payment relax you into prolonging your overall debt.

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Paying Off Credit Cards with Vegemite – Metaphorically Speaking!

Owen Richason — Thu, 12 Jan 2012 22:03:36 +0000

Aussies spent 2011 racking-up their credit card balances. At year’s end, the average credit card holder Down Under owed some $3,321, bringing the country’s total to rise to $49.3 billion–a $2.87 billion increase from 2006, the Reserve Bank of Australia statistics estimates. With such large balances owed, over 70,000 Australians seek help each year with their credit cards through Debt Relief Australia.

Consumers in such a conundrum can find debt relief not only by using official government and private resources, but also from an ordinary can of Vegemite. Not that credit card companies will accept vegetable spread instead of dollars, but your wallet and pantry might benefit from getting back to old-fashioned budget buys.

The Credit Card Game

Credit cards let you sign on the dotted line, receive a plastic cut-out and use it to pay for goods and services now. The stipulation is that you owe for said purchases later, potentially with interest and possibly including a fee or two. If every consumer were to think about credit cards in this sense, balances would be substantially lower.

But the credit card companies are aware of the credit game all along. And play it well, they do. Sure, credit cards are a great resource if used responsibly all the time, but one slip-up and the free ride may come to a grinding halt. That one instance may be enough to pave the wrong road, from which there is often no quick return.

Crafting a Strategy

First, creating a coherent strategy for dealing with credit card debt is essential to success. Not having a game plan will only lead to confusion and will not help you to not make a significant dent in those balances. Having a strategy means aiming at a target and keeping the goal in mind.

Start with some good ole Vegemite and toast. Crackers are acceptable, if you prefer. Not literally, but figuratively: begin with cutting unnecessary costs from your grocery shop and other discretionary expenses. That includes clothing, dining and any other expense that is variable and isn’t an absolute necessity to keeping a roof over your head.

Then, gather all your credit card statements. The latest statements will afford the most accuracy, but a statement from a month or two ago is still useful. Add up your credit card balances. Then, add up your non-discretionary expenses. This means fixed payments such as your private health insurance, loan repayments, mortgage or rent, credit card payments and so on. With these figures calculated, you can now add your subtotal of fixed monthly expenses to your subtotal of credit card debt and any other debts. Now divide the new total by your gross monthly income. The result will be your DTI or Debt-to-income ratio. If it is more than 0.3 or so, your debts and fixed repayments may be too much for your budget to handle..

Start Small

Using the “snowball” method, first concentrate on the credit card with the smallest balance. If you concentrate on that account first, once it’s paid off, you’ll have more money the following months to pay off the next largest balance. Along the way, you might have to subsist on Vegemite and cut back on more lavish meals. In the event you find it difficult to pay off even the smallest balance, you may even go so far as to move into a cubby house in order to lower your housing costs.

Be Resilient

After paying off one or two credit cards, you’ll notice the development of a bit of a cash flow in your bank account. It’s quite tempting to many people to spend some money at this point, and off the game plan they go. But sticking with your goal is critical to obtaining independence from credit card debt.

To stay motivated, use debt progress tracking websites like Master Your Card to see how well you’re doing. It’s very encouraging to count down the days until you’re debt-free, or find out how much money you can save on interest by paying more than the minimum repayment each month.

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What You Need to Know About Your Employer Checking Your Credit

Amanda — Mon, 09 Jan 2012 21:57:36 +0000

It’s the Catch 22 of a global recession: people are taking hits on their credit rating due to being laid off, while more companies are asking to see credit reports before they hire someone. Ironic? Perhaps. But it’s a practice that is here to stay, as companies use every means possible to make sure they are hiring a good candidate.

Even though it is becoming common practice for employers to check your credit rating, there are certain things you should know. Below you’ll find a list of the essential points, before you are taken aback by an interviewer asking about your credit.

Why are employers checking credit scores?

There are lots of reasons why interviewers may now ask for a candidate’s credit report. Now more than ever, it’s become a standard part of the routine background check companies usually do before hiring someone.

Companies want to make sure that they are hiring individuals who meet their responsibilities in a timely manner, and won’t have any serious financial distractions that will keep them from their work. It’s also become a deciding factor when a company is looking at two very qualified candidates with similar skills and background. In this case, the candidate with less financial hurdles will probably get the job.

Lastly, employers seem to believe that there is a correlation between financial woes and potential criminal activity. Although the theory is debatable, companies seem to think that those with financial struggles are more likely to commit theft and embezzlement.

A word of note: while employers are not taking too kindly to financial struggles, bad credit looks much better than a criminal record. In other words, you still have a decent chance of getting hired even if you have had a few debts and financial mishaps such as the odd missed car insurance payment over the years, provided that you’re an honest person.

Can I avoid the credit check?

Yes, and yet, practically speaking, no. Employers cannot look at your credit rating unless you give them explicit permission to do so. However, they also have the right not to hire you, so refusing permission for a credit check may land your application on the “no, thanks” pile.

What jobs require a credit check?

As I previously mentioned, credit checks are becoming a norm in many industries and roles. However, there are certain businesses that may be more inclined to checking job candidates’ credit than others. For instance, if you’re applying to work for a bank or some sort of financial service, you may well be asked to undergo a credit check. The same applies for positions that deal with accounts or customers’ money.

Federal and government jobs may also require a credit check. However, they only typically deny a job due to bad credit if the candidate would have direct access to cash at the business.

What counts as bad credit?

If you have had a couple of late payments, it probably won’t hinder you from getting hired. Furthermore, a bankruptcy cannot always legally be held against you – if this is an issue for you, seek further legal guidance to ensure you understand your job-seeker’s rights.

Employers who look into credit history typically look for serious offenses such as fraud, defaulted loans, debt collections, repossessions, foreclosures, and evictions. A minor fiscal mishap is typically not that much of a big deal when they’re choosing their latest recruit.

Image by Brett L.

Common Credit Card Myths and Misconceptions

JE Cornett — Thu, 05 Jan 2012 21:30:50 +0000

The world of credit cards is murky to many of us — danger may seem to lurk around every corner, and even the best credit card has the potential to be deadly to your credit score. Your best defence against making credit card mistakes is knowledge, and understanding some of the most common myths and misconceptions about credit cards can help you know what you need to manage the plastic in your wallet.

Misconception: As Long As I’m Making the Minimum Payment, I’m Okay

If you think that making only the minimum payment toward your debt is okay, you’re under the spell of one of the biggest credit card misconceptions. While making the minimum payment only will keep your credit from suffering, it really doesn’t do much to reduce your debt.

Skeptical? Consider this example: if you have a credit card with a balance of $5000 and an interest rate of 18%, and your minimum monthly payment is $125, it will take you 273 months, more than 22 years, to pay off that $5000. But that’s not the worst part – in those 22 years, you will have paid a whopping $6,923.14 in credit card interest!

Now, say you pay $175 dollars each month toward that debt. The monthly difference to your pocketbook is only $50, but in the long run, but the big difference? It will take you only 38 months to pay off your credit card debt, and you will pay $1,578.01 in interest, saving yourself over $5000.

Myth: Carrying Balances on Credit Cards is Bad for My Credit Rating

This one’s a bit tricky. Carrying balances on your credit cards may be a bad idea, but not for the reason you might think. As long as you’re making regular payments (of at least the minimum payment, of course) toward your credit card balances, you’re not necessarily hurting your credit – that is, until your balance hits your credit limit.

The closer your balance creeps toward your credit limit, the worse it looks for your credit score. However, the damage done to your credit limit is nothing compared to the damage done to your pocketbook. Carrying balances on credit cards is expensive, costing you more than you may be able to afford in interest fees. So, carrying a balance is worse for your finances than for your credit.

Misconception: Having Credit Card Debt is Bad for My Credit

It’s not really credit card debt that’s bad for your credit – rather, it’s how you’re managing that debt that may leave a poor impression. If you have three credit cards, on which you are carrying balances that are well under the credit limit, and you are making at least the minimum monthly payment on each card every month, you’re actually helping your credit, because you’re establishing a credit history that shows that you are using credit responsibly.

On the other hand, if you have three credit cards that are maxed out, and are missing payments or making them late, then yes, having credit card debt may be bad for your credit, because you’re showing lenders that you can’t be trusted to repay a debt as agreed.

Myth: It’s Impossible to Pay Off High-Interest Credit Card Balances

This one is a complete myth. It is possible to pay off high credit card balances and those with high interest rates, but in order to do so, you must be willing to get serious about putting a good portion of your income toward your debt repayment strategy. If you really want to pay off your credit card debt, you will probably need to commit to paying more than the minimum payment every month, even if it means taking on a second job or cutting your luxury expenses to the bone.

Don’t be taken in by these mistaken ideas about credit cards – used responsibly, they may be of benefit, and with a little dedication any credit card debt may be managed and reduced.

Image by Robert Couse-Baker