The way you deal with your money has a lot to do with the way you have seen your parents dealing with it. For those who had seen their parents living a life depending mostly on the credit cards, their usage of the credit card generally tends to be high. On the other side if you have seen your parents living a life of constraints but were those who believed in using cash they had, without even taking to credit cards; their wards will definitely stay away from them and hence will also keep distance with the different bad credit personal loans available. Those who use their credit cards invariably for any purpose, managing the credit card debts becomes a lot difficult and they are often seen taking to other sources to meet their requirements.
Credit card and loans have a major impact on your finances. Here are a few things you should do:
- Credit card debts and their expenses contribute majorly into the credit scores of the individuals.
- If you can successfully pay all your creditors on time you will be able to maintain a good credit score.
- In any case always try and maintain a balance of 30% of the credit card limit if you are unable to pay them.
- Try and keep your old accounts operational. If you have too many credit accounts and you decide to get rid of some of them, cancel the ones which are the latest.
- Try and use the different cards in rotation. Make a small transaction and pay it off completely. This will keep them active and also allow you to enjoy a good credit score.
All set and done, people know everything but when it comes to maintaining or following the steps all by themselves they simply fail on the same.
Here are some other ways which can be helpful to you and save you from piling up unnecessary debt to great levels.
- Know the interest rates on the credit cards you use. If you are to make a heavy purchase using your credit card, look for the credit card which uses the lowest interest rate. Try and use it for the purchase as it will save you on the interest part and a lot of money.
- If you are looking for a credit card, do not rush into applying for all of them that you know or you come across. Remember, each of the credit card companies make their own hard enquiries on your credit report. All this gets registered in your credit report and may leave you looking desperate for money. This is not a desirable condition to be in. It is therefore required that you do your groundwork before applying for any credit card.
- In case you have multiple cards, set out the cards for the payments you want to make using them. One of the ways is to keep a card dedicated to gasoline, use it throughout the month so as to track your gasoline expenses for the month and then clear off the debts completely before the due date commences.
- When you are to make a heavy purchase using the credit card, do not bank upon the minimum payment that you will be required to make. This might get you deep into debt. Instead try and make a plan and imbibe the same in your budget so that you can pay off the debts at the earliest.
If you are looking to make your children aware of the right way to money management, apply it on yourself first. Stay away from any extra expenses and avoid using credit cards for any of the unnecessary activities like entertainment, dining out or purchase of home appliances. Develop a habit of using prepaid cards and debit cards and this way you can keep the debts at bay.