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Economic Recession: Your Credit Matters Survival Guide
You can find hundreds of e-articles and tips on reasonable credit card spending and staying away from debts. After you read them, it seems that it is pretty easy to stick to several rules of rational credit card use. But when you try to put theory into practice, it turns out to be much harder than it seemed.
Even if you do your best and manage to live within your financial means and spend the amount of money on your credit card that you can afford to pay off, you cannot be protected from unexpected situations in life and some external factors. Now that the US economy is experiencing a slowdown, it is high time to do the impossible and take control over you spending habits.
So what can you do under the circumstances of economic recession in order to keep your finances afloat?
Gas prices keep rising, utility bills are getting bigger. Especially if your income is average or below, you are bound to operate on a shoestring budget. Using credit cards trigger extra expenses. At the beginning you have an opportunity to buy nearly everything you need and want. And it does not feel like spending real money. But together with your credit card statement you get a headache over how to pay all the bills.
Here are some tips for you and your financial standing to survive in the times of economic slowdown.
- Try to reduce the amount of credit cards you use. Leave all of them active, but just stop using the less beneficial or the ones with higher APRs. Keep on using low APR credit cards, for instance. This way you will minimize your interest rate money losses. Or, make some purchases with rewards plastics, if their rewards program really makes it up for the APR they come with.
- If you happen to behind your payments and realize that your credit card debt becomes unmanageable, you can resort to credit counseling services or to a debt consolidation company. But do not rush to do it. Try to analyze your spending habits first. Credit counseling can give you a short-term relief through eliminating the consequences of unreasonable credit card use. But as soon as credit counselors stop supervise your credit card management scheme, you can get back to the old one.
- Make up a list of your credit cards. Use your computer or just put down all the information about your plastics on paper. Enter your credit card interest charges, fees, the amount of the balances on every credit card and some other credit card details you will find necessary for your financial management.
- Plan out your budget. Think, what purchases you will need to make the following month, count the approximate amount of money it will require and set a spending limit for yourself.
- Make credit card payments on time. You, probably, are sick and tired from this phrase, however, following this advice actually works. Disciplined credit behavior will help you to improve your credit score and get used to manage your finances right.
Surviving when the country's economy causes credit card market problems can be really uneasy. However, if you keep your head cool and take control over your credit card spending habits, you will make it through the rainy day.
Most credit tips say that the sooner you pay off your credit card balance - the less money you will lose on interest. On-time payments will favorably bound back on your credit score and payment history. This kind of advice is what we all are used to hear and read on the Web, in financial magazines, in tips columns. But does this financial behavior model really have a positive effect on your FICO score and credit report?
How can it be questioned, you ask? A perfectly disciplined plastic owner that pays off his or her balance before a lender could say Jack Robinson. Is not it any creditor's dream? No, it is not always so. Let's find out why a lender would want a different behavior model from a borrower and when this kind of paying down debts can weigh heavily against a cardholder.
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There are a number of embarrassing situations that are just a nightmare for cardholder. Feel no wallet in your pocket just before the cash register? See some unauthorized charges in your credit report? Loose you wallet with all your plastics in it? Very soon we are going to have no fear of these things, thanks to amazing technical progress.
Indivos Corp. which majors in computer hardware and software development has been working on an electronic system for making payments over a number of years. The thing about this system is that it enables transactions to be made by scanning customers' fingertips. A number of retailers have already expressed interest in testing the new system.
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Active credit card use is a sign of a society with well-developed market relationships. More and more people get involved in buying goods and services with plastics. Using virtual funds to make real purchases is very convenient. But this extended buying power has led Americans to a dangerous trend. Over 40% of American households, according to the USA Federal Reserve statistics, spend more money than they make.
In the average, every American of these 40% spends $1.2 per every $1 he or she earns. Plastics have changed people's spending habits. These plastic devices allow and encourage people to spend more and more money. Around 18% of all purchases made by Americans involve credit card use. About 24% of the purchases are made with other types of plastics.
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If you are determined to eliminate your credit card debts and you have good credit, getting a balance transfer card is a good idea. You can shift your credit card balances with high interest rate to a card with much lower rate or 0% APR at all. But there is one thing that can reduce your profit from this kind of a deal. It is balance transfer fee.
Most balance transfer cards come with a fee for a transfer. Not long ago you could easily find a plastic for balance transfers with no fee. However, due to the credit card market crisis and economy slowdown, lenders have pulled these deals from the market. And now it is rather hard for a customer to find a balance transfer card that comes with no fee. But there are some ways to negotiate a better balance transfer deal.
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