Every day when you turn on your televisions, radios or log onto the Internet you are faced with news about the credit crunch and how it is now hitting the banks. You will also have discovered that the generous credit limits you were once afforded have, all of a sudden become a thing of the past.
If you miss a payment or even pay it a few days late, in many cases your APR will take a hike overnight and the fact that you have kept your account in order for years does not seem to come into the equation. At this point, instead of taking credit advice, many folk opt make the minimum payment on one card by taking a cash advance from another card. Although it is handy to be able to do this, such advances have a transaction fee applied to them, so in reality you are only getting yourself further into debt. If you continue in this mode of borrowing you will soon find yourself in a downward spiral. When your credit rating has dropped, and your rates have gone up having all this mess to sort out will become a nightmare.
It is at this point where you realize you cannot go on like this. You need some credit advice and you need it now.
If you were to give your children credit advice – what would you say? You are the voice of experience talking. After all, you have been there and done that, so you should listen to and learn from your own credit advice. Listed below are some principal credit rules.
1. If you want to buy something but do not have enough cash – forget it. Your credit cards should only be used for those monthly expenditures which you have the cash in hand for and are able to pay off in one go when your statement arrives. This will help also you to build up a good credit history.
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!
The top and bottom of the best credit advice is to live within your means and remember to set up a savings plan, however small so you can face whatever financial strains life throws your way without getting into debt.
