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Credit Advice Article
Credit Advice
Looking for credit advice? Here are the cardinal rules of
credit
When the economy gets as tight as it is today, so do banks. We hear
news reports that the credit crunch has now hit the banks. Banks are no
longer willing to extend the generous credit limits of the past.
Your APR may rise overnight due a late or skipped payment, no matter
how long you've maintained a pristine payment record. Plenty of people
find themselves taking a cash advance on one credit
card, to make the minimum payment on another. Cash advances mean a
transaction fee, while making the minimum payment on the other barely
keeps you afloat until the next payments are due. This type of activity
can put you in a downward spiral which ends unhappily. Your credit
rating goes down, your rates go up and you've got a mess on your hands.
While this is not a pretty picture, your need for credit advice is
becoming apparent. You know you can't continue this way, but what can
you do?
If you were to sit down with your kids and try to give them your best
credit advice, what would you say? You've been there, done that, and
the credit
advice you give them will be the voice of experience.
Learn
to follow your own advice. Here are the cardinal rules of credit.
1.If you can't afford to pay cash for an item, don't buy it. If you
reserve the use of credit cards to purchases such as gasoline, clothing
and regular expenditures for which you already have cash in hand, you
can maintain a credit history and good credit rating by setting that
cash aside and paying off those credit cards each month.
2.Emergency expenditures do crop up. You may need a root canal for
which your insurance only pays a limited amount. A credit card may be
used responsibly for such purposes. Our credit advice in this
situation? Adjust your monthly budget and pay it off in the shortest
period of time. It may be tempting to make that minimum payment, but it
may take a year to pay it off. The interest alone may turn that root
canal into a $1000 deal.
3.Almost everyone ignores this prudent bit of credit advice: Do not
finance holiday shopping on a credit card! Sure, you want your family
to enjoy the great gifts you can put on a credit card. However, you
don't want them to suffer six months down the road when you're unable
to pay for essentials.
4.No matter how tight your budget is, almost everyone can afford to put
aside $10 a week in a savings account. Not much, but in a year's time,
you can pay cash for that root canal!
In a nutshell, our best credit
advice is not to live beyond your means.
Establish a savings plan, no matter how modest. You never know what
life may throw your way.
Next page: Credit Cards For Teens
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