Month: February 2012

Credit Debt Is Bad for Your Health

Are you consumed with worry over your credit card debt?

If you answered yes to the above, like most of us today, you aren’t alone. But it is bad for your health so you do need to do something about repairing your credit payments before the situation gets worse. And if you don’t do something about it soon, then the chances are increased that you could well become ill.

Bad health from stress and worry is now a recognized result of debt worry. If you became ill, who would be there to pay your debts for you? Could your family survive and still keep up to date with any credit card bills that come in each month?

The best idea is to recognize and admit when you start to see a problem arising. Don’t hide it from your family and don’t ignore that repayments are starting to become a problem. Contact, in writing, your financial institution and see if you can renegotiate your repayments.

The next thing to do is to leave the credit cards at home when you go out so that you don’t add any more credit debt to an already overloaded repayment program.

If you simply and absolutely can’t do without something, like electricity, then you will have to put it on your card (if you can). But if the need for something is not as urgent as that, forget that the card even exists. That will save you money.

Work out a budget and stick to it. Use cash and not a credit card. Cash is still King.

If you don’t know what needs to be included in your budget, have a look through the charges on your credit card. You are bound to see many small payment on there that you should have paid for using cash. If you don’t carry cash on you for these small payments of non-essentials usually, then perhaps a life-style change will be a good idea before you are forced to make a change much bigger than one you and your family, can live with.


Paying Credit Card on Time Saves Money and Reputation

Paying a credit card on time will save you money and it will save your reputation with the credit card company.

By paying a credit card on time you save on interest because with some credit cards the interest accrues each day and if there is an unpaid amount owing, the interest on that makes next month’s minimum payment that much more.

If at all possible, if you pay off just a few dollars more each month than the minimum owing, you will be very pleasantly surprised at how fast paying your credit card debt will happen. Ideally, of course, you should be paying the total amount off each month but that isn’t always possible. But if you are just using your credit card for what were once known to be “running around expenses” and you haven’t bought any large purchases, then if you are budgeting well, these small uses should be coming out of your budget.

Credit cards were once only used for large purchases.

Historically, the credit card was invented for people who just wanted to borrow a small amount of money to buy a fridge or a washing machine. These larger purchases were able to be paid off in a short amount of time. Originally, the credit card was not designed or intended by the banks to become a daily usage monetary system in place of cash.

Once people started having all their wages and salaries paid directly into their bank accounts; which occurred because of the convenience factor and because it stopped the pay-roll robberies, people then started to use their credit cards to make smaller purchases when they didn’t have the cash on them to pay for something. These smaller, unpaid amounts on credit cards, started to return a serious amount of interest based funds back to the banks so they started to encourage more and more use of the ‘plastic money’ because it increased the banks bottom line substantially.  Hence today, most banks around the world regularly announce profits in the billion dollar vicinity each year.

These Billion dollar profits substantially originate from people who don’t or who are unable to pay off a credit card fully each month. Paying a credit card that has many small amounts charged against it, should be easy to pay if you can regularly pay it off every month.