Credit card debt is a problem for many people and is a major contributor to personal debt. Funding your lifestyle with a credit card is easy but the hard part is paying it off and clearing the credit card debt.
Temptation is all around and offers of credit cards come through the mail on a regular basis. However, before you give in, you should decide whether you can trust yourself to use it wisely.
If you are someone who has a history of overspending and building up Credit card debt, it might be easier in the long run if you exercise some self-control and tear up the application.
But if you trust yourself not to get carried away with your credit card, you will still benefit from following some simple rules to keep you on the straight and narrow.
The first and, perhaps, most obvious thing is to choose your credit card carefully. You should look for the best interest rate you can. That won't be easy, with literally thousands of cards available on the market. However, the internet is a good resource – look for a site offering comparisons of the various credit cards available.
Once you have chosen wisely, it is a matter of using the credit card in the right way. There's no doubt that the best way to handle your credit card debt is to pay off the balance every month. That way you won't get lumbered with unnecessary interest and you can be sure that you are not spending more than you can afford.
Of course, this might not always be possible – hence the importance of getting the best interest rate you can. In fact, you should be prepared to switch credit cards regularly so you know you are getting the best deal you can.
You might find there are several credit cards offering a low introductory interest rate – sometimes even 0%. You might be able to take advantage of these and then switch to a similar offer once the introductory period runs out – and so on.
Whatever you do, don't fool yourself into thinking that you are coping with your credit card debt just by paying the minimum monthly amount. It can take years to pay off a card in this way and you will end up paying through the nose in interest charges.
Even worse, don't miss payments. Don't give the credit card companies an excuse to hit you with penalty charges and add to your credit card debt.
As far as store cards are concerned, they are best avoided. These interest rates store cards carry are usually way in excess of those of normal credit cards. Sometimes there are attractive money-off or free-gift incentives – take advantage by all means, but pay off the balance straight away and then cut up the card.
Even with the best intentions it can be difficult to keep your credit card spending in check. So if you do run in to difficulties, make sure you acknowledge the problem as soon as you can, then take professional advice. That way, you can deal with the problem before it really gets out of control.
John Porter, a senior debt counsellor with The Debt Counsellors, provides free confidential advice on credit card debt.