The numbers are staggering on people with excessive credit card debt. While the debt is created in many different ways, the results are the same, your money is no longer yours. It’s wonderful to have good credit. It opens the door to fantastic opportunities like the ability to purchase a home and a car without having the money in hand. On the downside, having too much credit can actually hurt you in more ways than you might imagine. It can lower your credit score and set you up for a big disaster should you lose your job or fall ill. The good news is that there are ways to get things in check now to avoid having too much credit card debt later.
Taking out an installment loan
Sometimes unexpected expenses come along and you need to take care of them sooner rather than later. Instead of maxing out your credit card, why not take out an installment loan instead. They provide you with a fast payday loan alternative with a short period for repayment. This will allow you to complete the repair and cover the expense without dragging it out on a credit card for a year or two. By doing this you’ll have your debt paid off quickly and avoid the high-interest fees associated with your credit card.
Advantages to prepaid credit cards
Pre-paid credit cards offer a great way to tuck away money for a rainy day. You can purchase them online or at most any store and you can add as much or a little as you want. By stashing a few of these cards away with your bills you’ll always have a reserve on hand for any repairs or other emergencies that might come along.
Establish an emergency account
When you establish a budget, part of it should include the addition of an emergency account. This account is separate from your checking and saving account and used only for the purpose of an actual emergency. You can use it for a problem with your plumbing or the need for an alternator for your car. What this does is actually give you access to separate savings account that you fund weekly or biweekly depending on how you get paid. This keeps your bills current, your credit cards limited and your credit score in the excellent status.
Savings for what you want
One of the biggest mistakes people make is impulse purchases. It’s okay to want nice things, especially when you work hard all week. But, there’s a time and a place for everything. Impulse purchases tend to go on credit cards so as not to deplete your checking account or limit your spending cash. The problem is that by doing this you’re costing you a lot more money. If you were to pay it off when the bill comes in then that would be smart. However, most people tend to pay off larger purchases over time. And, when it’s put on a card you now have another debt to pay for. Instead, save up for the larger items you want. Then when you have the money shop around to get the best price available. This way you’ll have something you own, free and clear.
Sometimes there’s no way to avoid putting something on a credit card. If it happens to you, then apply for a card that you can transfer the funds to and has an interest-free period for 6 months to a year. Then, at least you won’t add any additional fees to the original price tag and have the time to repay it slowly.