It is possible to make your debts manageable when you change your spending habits. Here is the top list of things to avoid like plague while using your credit cards.
Do not just pay the minimum balance.
It is in your best interest to make as large of a payment as you can afford monthly instead of keeping your bill growing by making minimum payments. Just to put things in perspective, if you have a thousand dollars owing on your credit card and you pay the minimum, it is likely to take about ten years to pay off!
Do not engage in cash advances.
Shred the checks you receive from credit card companies enticing you to use them to treat yourself to something nice or to pay your bills. There is usually no grace period on accepted cash advances so you end up paying a higher interest rate and extra fees associated specifically with cash advances.
Think of these cash perks as hot coals – you are bound to get burnt as soon as you touch them!
Do not ignore or forget your debt.
Set up an automatic deposit from your bank account or set up reminders on your calendar. If you get overwhelmed by the amount of your debt, do not hesitate to call the company directly and negotiate a better deal or a payment plan with a customer representative. Do not take ‘no’ for an answer and keep calling them until you reach a rep that is willing to give you a better deal.
Ignoring your debt completely is a bad idea that can spur debt collectors into action that can have very damaging consequences to your credit history. Do not let shame or embarrassment prevent you from taking action, ask for help today.
Do not pay extra fees.
Make sure you go over the list of the extra charge triggers on your credit card agreement. You need to avoid behaviours that incur extra fees:
• Going over your credit limit
• Using the ATM machine
• Returned payments
• Extra copies of account statements
• Overseas purchases
• Using a card you haven’t used for a year
Do not hold multiple cards
Ask yourself whether you really need more than one card, honestly. Retailers and even hotel chains are constantly promoting their own credit cards with the promises of discounts and other perks. But after all, it is another debt to manage, another fee to pay. Pick a credit card with the fees and conditions that you can handle and stick with one.
Quick credit card debt management tip:
Look for a credit card with an option of a balance transfer offer. There are credit cards that charge 0% interest in the first six months if you transfer your other credit card balances to it. In some cases, 6 months can be enough time to figure out your finances.
Don’t have a credit card yet? We can help with that! Take a look at the offer from Manulife– a no fee credit card that lets you earn cash back while you spend.