The Most Interest

Althought consumer credit is no longer at an all time high, in this country it is still a problem. You know about credit cards, at least you think you know a decent amount. Our national savings rate is slowly increasing. Become part of the trend, here are 4 ways to combat Credit Card Debt.

There’s been a boom in online shopping. That trend is certainly not stopping. Online transactions are absolutely dependant on credit cards – and this isn’t helping the average consumer. Running a balance on your card and paying interest rates that are out of this world (when compared to what you would receive in return for such balances at a bank) is how the majority of consumers create the biggest issues for themselves. The proof is in the mail. Literally – how many direct mailers do you see on a yearly basis telling you that you qualify for 0% interest? The paper, the postage, the design and the time spent on creating these costs money. Credit Card companies don’t mind – they know they’ll make that back and then some off consumers.

Facts are, Credit Cards are a way of life. No one wants to carry cash anymore. So its wise to understand how to use them. Its impractical to not have credit cards at this day in age. Being prudent and limiting the number of cards you have, or simply just the ones you carry and use on a regular basis is important. Paying them, yeah, that’s also important.Indeed, having only a traditional American Express card, which doesn’t allow you to carry a balance, can be an excellent way to impose fiscal discipline on you and your family-although, as the Visa ads point out, not everyone accepts American Express. For the rest of us, who do occasionally dabble in credit-card debt, here are a few ways to keep your habit under control.

So here they are, 4 ways to combat Credit Card Debt and use Cards more wisely:
1. Take advantage of frequent-flier or cash-back programs tied to credit cards, but keep in mind that interest payments on a high balance can quickly turn “free” flights into outrageously expensive ones. At a dollar per mile, running up a debt of 25,000 may get you a plane ticket, but it will also saddle you with $4,500 in yearly interest payments, assuming an 18% annual rate.

2. Look very closely at credit-card offers before you bite. Obviously, most of those 2.99% and 3.99% rates will be in effect for only a few months. But there may be other catches as well. Making a late payment, even if it arrives only a day after it was due, may immediately trigger a permanent rate hike. Also, low initial rates sometimes apply only to transferred balances, and you could get charged a fee for making the transfer. Check, too, to see whether there is an annual fee, or charges for exceeding your credit limit or even for closing an account.

3. Avoid amazing grace-period tricks. What you’re looking for is a provision that says you’ll never be charged interest as long as you pay your bill in full by the due date. But some cards have no grace period, calculating interest from the moment you make a purchase, while others give you only a limited time after making a charge before interest is imposed. That period of 20 days or so may end before your payment is due.

4. Don’t forget to cancel cards you no longer use. If you don’t, they’ll show up on credit reports, and that could be a problem, particularly if you’re applying for a home mortgage. Your would-be lender may be reluctant to make a loan to someone who has a cumulative credit-card limit of $50,000, $100,000, or even more.