How To Manage Your Credit Card, and Debt Consolidation.
Credit cards are handy things to have, for sure. You don't have to carry large amounts of cash around, you can buy things over the internet, and you know you've always got money when you need it.
But there's always the temptation to spend more than you have; something the banks really encourage you to do, because then they make lots of money out of you. The Credit part of the credit card is the trap.
Credit card interest rates are often the highest interest you ever pay outside of loans from loan sharks. In my country at this moment it's running at about 24% per annum. This is a quick way to get into financial trouble.
We need to manage our credit cards very carefully. Here are some suggestions and ideas:
Living within our means is the first ideal we should strive for. Try and buy for cash. If necessary, keep a credit balance in your credit card, and as soon as you make a purchase, top it up again.
Keep a book of all your transactions. Or get a software program that helps you to manage your budget, and put everything in there.
Tell your partner about everything you buy. Having to explain your purchases to someone makes you think twice before buying anything!
Keep all your purchase slips for about a year or so, to help you figure out "where the money's gone."
Discuss large purchases beforehand with your partner or a friend or family member. This prevents impulse buying.
If you have good self-control, you can run the card in debit for the 50 or so days grace period that they give you to pay back your debt without any interest being charged; but make sure it goes back into a credit balance before the time period is up.
If you have a home loan or mortgage bond that you can draw money from, then use that to repay your credit card debt, as the mortgage interest rate is much lower than the credit card interest rate. This is known as "Debt Consolidation," which means that you get all your different high interest debt into the debt that has the lowest interest rate. Mortgage loans are usually the lowest, so you should use that money to pay off your furniture and clothing debt, credit card debt, vehicle loan debt, overdue utility accounts; the lot! BUT, then, you must not buy any more stuff until you have paid most of that "borrowed" money back.
Some things are unavoidable, like school fees, tax and so on, but other things like electricity, travel, luxury goods, etc, can be managed and controlled if you put your mind to it.
It's very easy to get into serious debt, and a lot of work to get out of it. But it can be done, and life is a lot more pleasant if we don't have the worry of debt hanging over us.