Understanding Credit Cards

It’s so easy to whip out the plastic when you’re on a shopping spree or out to dinner and worry about paying it at the end of the month. But it can get you in trouble quickly! Many people in America are drowning in thousands of dollars in credit card debt and being eaten alive by their interest rates. Spend wisely.

  • Many credit card companies are more than eager to extend credit to you and continually increase your limit. Just because they increased your limit to $20,000, doesn’t mean you can handle $20,000 in credit card debt. The interest rates on these cards can be 18% or higher meaning that if you pay only the minimum payment due on the card, in most cases you aren’t even paying all of the interest that accrued, much less on your actual balance. By paying the minimum payment, you could literally be trying to pay off your card for decades. Not years, decades!
  • Do your best to consolidate your credit card debt to one card. One payment is more manageable than several each month. If you’re unable to do this, begin with the card with the highest interest rate and work to get it paid off while paying the minimum balance on your others. When that one is paid off AND you’ve closed the account, move on to the card with the next highest interest rate and so on until you have it down to one card.
  • Call your credit card company and negotiate for a lower rate. Tell them you have offers from other companies with lower rates. As long as you have consistently paid on time, many companies will lower your rate but you have to make the call.
  • When putting purchases on a credit card, you should be careful. It is very easy to run up debt that sometimes seems impossible to pay off. One of the coolest tricks I’ve heard of (pun intended) is to put your credit card into a container of water and freeze it. If you have the temptation to make a purchase, take your credit card out of the freezer to thaw out. Once it’s thawed, if you still want it, go ahead but I’m willing to bet you will have changed your mind.
  • Some people use their credit cards to reap the rewards such as frequent flyer miles. If this is your case, just be sure that whatever you put on the card, you can pay off the balance at the end of the month. If you end up paying monstrous amounts of interest on the balance, then those free miles weren’t as free as they originally appeared to be, were they?

Remember, that you only pay interest if you don’t pay off your card each month. Be responsible with your credit cards and your money. You’ll save yourself lots of late nights worrying and not answering the phones to avoid the collection agencies. Be responsible.

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Stacey Abler
Stacey's husband joined the Army in 2003 and was medically retired after four deployments. She enjoys sharing her experiences and expertise around Army life while continuing to support Army spouses and families in their military journey.

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