Quantcast
Channel: Business Brief » credit cards
Viewing all articles
Browse latest Browse all 3

4 ways to avoid spiraling credit card debt

0
0

New regs promise to keep financial institutions from robbing consumers blind, but you could still find yourself in the hole if you don’t keep a close eye on these four areas: 

  1. Read the fine print if you elect to opt out: Some borrowers assume they can nip their credit woes in the bud by cutting the card in half and continuing their monthly payments until they reach a zero balance. But beware! Most lenders are hip to this strategy and they often force borrowers to pay back their entire balance in five years or less once they’ve closed out the card. That means higher monthly payments in less time. Other companies tack on penalties for non-use (in the case you haven’t officially closed out the card). New laws will curb that practice come August, but over the next two months, borrowers still need to proceed with caution.
  2. Know the conditions that could result in an inadvertent rate increase: Low introductory rates (that increase after six months to a year), breach of payment agreements and ongoing delinquencies are just three of the ways credit card companies can legally jack up your rates. Be vigilant. Read the terms and conditions and watch your monthly statements closely to ensure the bank doesn’t try to sneak one past you when you’re not looking.
  3. Pay more than the minimum payment: Minimum payments are like Vegas-style Black Jack – the house always wins. Depending on your overall balance and interest rate, you’re likely to notice when you elect the minimum payment each month, your balance can actually increase. Beyond which, if your card started with a low introductory rate, the bank will likely pin the higher rate to all your past charges once it kicks in. Pay more now, less later. It may sting a little now, but it could help you avoid a major disaster later.
  4. Keep an eye on the new warnings and calculations: Banks are now required to include a statement on your monthly bill that tells you how long it will take to pay off your balance if you make the minimum payment. Use a calculator and the same math to determine what monthly payment will allow you to eliminate your debt in a suitable amount of time, and adjust your payments accordingly.

Can you think of any other credit card tips that could help others minimize or eliminate debt? Have you had any nightmare experiences with credit cards in the past? Feel free to share your thoughts in the comments section below.

Source: 5 ways to minimize your credit card pain,” by Laura Rowley, Yahoo Finance, 6/15, 10.


Viewing all articles
Browse latest Browse all 3

Latest Images

Trending Articles





Latest Images