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5 Must-Know Tips to Manage Your Credit Card Debt Better
By Robert Banks
In a weak economy, using credit cards to meet daily expenses and for other purchases
is inevitable. According to the American Bankers Association, the average American
family carries approximately $8000 in credit card debts. Credit card debt is the
leading cause of people getting into financial difficulty. These tips will help you
manage your credit card debt wisely, and help those already buried in credit card
debts crawl out faster than you can imagine.
How to Control Credit Card Debt
0% APR Balance Transfer:
Be on the lookout for 0% APR ( APR is the annual percentage rate on a credit card)
balance transfer deals with a minimum introductory period of 12 months.
Ideally there should be 0% APR on new purchases as well so you can avoid paying interest
on your old and new purchases.
This option should be used to pay off the balance and not just to defer paying your
There is often a balance transfer fee attached and depending on the value of the
balance being transferred, the fee could be quite high. So calculate how much you
would actually save by transferring your balance to the new credit card.
Use cash as much as possible:
With credit card facilities provided by numerous merchants, it is becoming much easier
to pay by card rather than by cash. You use your card now and make a mental note
to transfer the cash later, but more often than not, you find other uses for the
cash and end up retaining the debt on your credit card.
To avoid this extra debt, use cash to pay for your purchases. Once the money is gone,
is gone forever. If the purchase is not absolutely necessary then hold out until
the cash is available.
Be aware of the additional fees:
There are the obvious fees – late payments, overdrafts, cash advances, replacement
cards, extra account statements – but there are also less obvious fees that can quickly
These may include balance transfers (both to and from your card), speaking to a customer
service representative (instead of phone automation), inactivity fees, “minimum balance
not met” fees.
So if you do not pay your credit card bill on time, go over the credit limit or use
credit card to withdraw cash, you would have to pay separate fees for each transaction.
If you were to do all three in one month, you could be charged an extra $40 at least,
depending on the rates of your credit card provider.
Save while you spend:
There are many credit cards available that allow you to save in direct proportion
to your spending. It is a new twist to rebate cards. Instead of the rebates going
back to you, it is invested directly into your savings account which is attached
to the credit card account.
Obviously the more you spend the more you would save, but this also means you would
have a lot more debt to repay, so you still need to twice think before you actually
Although the account rewards you based on how much you spend, you should not be enticed
to use this method as your only means of saving.
Make wise financial resolutions:
To manage your credit card debt, you must make a conscientious effort to do so, this
would involve, spending on only the things you really need and deferring luxury purchases
until a later date.
While you cannot stop spending immediately, you can start to take stock of how you
spend your money by using credit cards. Watch your debts carefully and make a plan
to save and reduce your debts at the same time.
With foresight, knowledge and planning, you can better control your credit card debt.
In fact, you can even become debt-free!