I Love My Credit Cards, But..

I have several credit cards. My father hated them. He said they would be the ruin of me. I disagree. I have small debts on every one of them. Tax season has arrived and so has my refund check. Today I am knocking all of them down to the point of bare existence. I am also putting part of that money aside for a nice new used car.

There are common sense credit card rules that should be followed if you want to hold one. I learned the hard way.

The first rule is if you can’t pay for it, don’t charge it. Who follows this rule? I usually do, but well, I don’t follow too many rules. Some people do follow it, though.

If I am shopping at Penney’s, I look at the ad and determine how much I need it and how fast I can pay it off. I bought my new sofa at the Penney’s outlet. We did comparison shopping for months and finally bought it. It was on sale and I had a 15% off coupon. With taxes, the price rose once again. I reasoned that I should be able to pay this off shortly. I bought in September. My dog uses it as a chew toy and my cat uses it to sharpen his claws. I am so glad I didn’t pay a lot for it. My dog is getting a muzzle and my cat is getting his toenails trimmed. The sofa, well, it will just have to be repaired.

The second rule is if it has high interest, pay it off faster than anything you owe with lower interest rates. A $1,000 card with 10% interest, adds on $100 interest annually, if not paid off. A $10,000 card adds on $1,000 interest annually at the same interest rate. I have one card which charges 24.99% interest. I pay more money on that card than any other. When that is gone, I will no longer use it.

The third rule is if it charges interest, it is not there to make money for you, so that 5% discount is instantly lost if the debt isn’t paid off promptly.

The final rule is if you miss a monthly payment – woe to you, your interest is very likely to be increased, and a credit card late fee is attached. I like to call that fee a fine.

Why do I use charge cards? The answer is instant cash. I don’t want to carry $1000 around with me everywhere. That tiny bit of interest is still interest coming my way.

On January 1, I made a resolution to pay off all of my debts. This is an amazingly hard thing to do. I was shocked at how hard it was when I planned on paying off one of my debts and my husband got sick. The money I had intended to use went into paying the regular bills. Then the company hit me the next month with a stupid fee for not paying it off soon enough. On the 25th, I finally managed to send them $475, which did not pay it off, but it left a very small remaining debt on the card. That card will be paid off by the end of April.

My 24.99% card is getting hit in the gut today with a large payment. The interest rate will not instantly drop, but my credit will improve drastically.

Six credit cards with $1000 available credit means you don’t need the money. If you have charged up all of the cards, to the limit, then they know how you handle your money and they aren’t impressed, Remember this, if nothing else, the bank is the king of the show. If you want a low interest rate on everything, don’t use plastic for everything. Think before you charge.

Keep all of this in mind and use the plastic wisely.

Someone pointed out that if you have $10,000 in savings earning .50% monthly, along with a credit debt of $10,000 with interest rates of 20%, you are losing hundreds every month. It is far wiser to pay those cards off. You make money by decreasing debt. When you die, your debt is subtracted from what you own. Many of us in the 1980’s and 1990s owed more than we owned. But then again, look at the economy.

There’s an old saying, “you pay to play.” With credit cards, you probably do and you pay alot.