Credit Cards and Plastic Money Do’s and Dont’s

The most important advice for using credit cards is that credit cards are no substitute for having no money. Indeed credit cards are nothing more than a tool for spending real money – money you already have or money you will (not might) have in the near future. Be careful when using plastic money, because credit card debt consolidation and other forms of debt relief can be difficult to accomplish and really frustrating.

Every time when using a credit card the above should be the theme replaying in your mind. And you will also profit from remembering the following tips for a thoughtful use of plastic money:

Credit Card Do’s

• Always carefully plan your purchases and divide them into those purchases that you really need and those that you only desire. (What you need is what is essential, and what you want is everything else.) The ability to make a distinction between a real need and a simple desire will enable you to plan more wisely and help you to avoid making credit card debts for no good reason and without real need.
• Stay within your credit limits unless there is any real emergency. This will help you a lot. Consider the real limits arising from your income situation and not the limits your credit card issuer has given you. They might differ too much. Ask your card´s issuer to reduce your credit card´s limit, so you don´t accidentally spend over your real personal limit.
• If you are caught up in financial troubles, talking to the credit card´s issuer will never be a bad idea. They might for example re-schedule your payments so you have to pay a smaller amount per month. Simply doing nothing will only help you building a really bad credit history and you could find it much harder to get a credit credit card or a loan the next time.
• If it turns out that the issuer is not able to help you, there are many companys specialized in credit card debt consolidation. Debt consolidation means to take out one loan to pay off one or more others. In this way lower or fixed interest rates can be secured. Of course for taking out a new loan having a bad credit history won´t be very helpful. So credit card debt consolidation might become more difficult or even impossible if you wait too long to pay off your credit card debts.
• If you find more favourable credit card deals than you are enjoying currently, you should first ask your current credit card issuer for a better deal. Of course they want to keep you as their client, therefore they will listen to you (well, not always).

Credit Card Dont’s

• Do not use plastic money but only cash to make simple daily purchases (for example for buying food). Using a credit card for daily purchases will turn out much too expensive in the long run. Using cash will help you to see how much money you really have left to spend.
• When paying off your credit card debts do not just pay nothing more than the minimum amount which can lead to paying high interest. The faster you clear all debts the better for your financial peace of mind.
• Do not think credit card debt consolidation (or other kinds of debt relief) is a miracle cure for debt problems allthough many companies offering such services might give this impression. It takes time and money. And there are many black sheeps in this business who are more interested in their own benefits than in your real financial situation. There are cases where credit card debt consolidation is simply impossible in the usual ways, but many companies will nevertheless let you pay for their useless assistance.
• Do not use credit cards to make any purchases you can’t afford. Remember: Plastic money is no substitute for real money.