1. Most people that if you use credit card, you pay off balances monthly. If you use credit cards like this as a simple and easy way to pay for goods and services on and off-line, then there really is no problem.
2. When you see the balance of your credit cards getting past one months wages, consider tightening your belt for a couple of months to try and get the balance of your credit cards down.
3. If you find yourself spending without any recourse as to how you will pay the money back, you should seriously examine your purchasing behaviour. The typical sorts of people who get into trouble using credit cards are impulse buyers. If you find you fall into this category, leave your credit card at home when you go to the shops and take cash instead.
4. Realise that you don’t have to keep up with your neighbours to enjoy your life. This is one of the most sinister traps which leads to credit card spending. Will a 62 inch television really give you more enjoyment than a 32 inch television?
5. When paying down debt, choose the most expensive debt to pay down first. In the vast majority of cases, this is credit card debt. Get rid of it first and get rid of it fast.
6. If you do find yourself in trouble with credit cards, the absolute worst thing you can do is to take out a loan to amalgamate all of your credit card balances into one “easy” monthly payment. Very often, these loans are stretched out over a decade or more and so you end up paying more on the interest than you would if you took the difficult decision to pay off your credit card quickly.
7. During periods when wages are falling, you must do everything within your power to get out of debt. Credit card debt at this time should be one of the first thing you pay off because the double whammy of falling wages and high interest rates makes the debt burden proportionately higher.
8. When inflation is rising, credit card debt can be a good way to pull future purchases into the present. Since we are likely to enter a period of relatively high inflation in the next few years, any credit card debts will be deflated in real terms when compared to your wages. However, you shouldn’t use this as a signal to go out and spend recklessly.
9. If you have large purchases to make, you should try to do anything rather than put them on your credit card. Getting a loan from your bank or a mortgage equity withdrawal will often be much more cost-effective in the long run than paying double-digit interest rates on a credit card debt. However, you should make sure that there are no penalties for early repayment of any debt which you take. Then, simply save the money in an interest-bearing account and wipe out the debt in one go as quickly as possible.
10. Ensure that your credit card bills are both manageable and have a good interest rate at all times. Continually look for 0% offers from different credit card providers if you find that your credit card debt is spiralling out of control. Paying down the balance is much smarter than paying interest. Often, all it takes is a quick look at the Internet.
