Controlling Cash Outflows Series
Today we pick up where we left off yesterday running down ways that you can avoid maxing out your credit card. To revisit the First part of this series see How to Avoid Maxing Your Credit Line Part 1.
If you do carry a credit card, know exactly what your balance and available credit is, and calculate what 80% of the maximum balance would be. This should be your true available credit. If you have a credit limit of 5,000 and you have a balance of 500, your statement will tell you that your available credit is 4,500. This is a slight falsehood. You should never run your balance over the 80 percent mark, which in this case would be 4,000. Your real available credit is 3,500. When you go over this thresh hold you are signaling all of your creditors that you may have spent to much, are spending to much or are becoming over extended. This means that you are riskier to them and they can only mitigate this risk by charging you more, therefore they will be more likely to raise your interest rate. Avoid this common trap. The actual percentage level varies so always try and stay well away from max.
Always Go shopping with a specific list - (We will cover more on this in tomorrows article.)
If you can not afford it with your cash, or savings or checking funds. Do not buy it. Think what would my grandparents have done in this situation.
Save for the future. Pay closer attention to your future needs and save up to cover those needs so that you are not pressured into using credit.
Put aside a rainy day fund for emergencies. Setting aside an extra 50 - 100 pounds or dollars can build up a nest egg in just a few months that you can tap in emergencies so that you do not have to fall back on a bank.
Credit Companies are the corporate version of loan sharks. They are out to make money from you by providing a service. Many regulations and laws have been enacted all around the world to protect you, but at the end of the day they would not loan you money if it were not profitable. Just because you have been sold on the service and the slick presentation does not mean they have your best interests at heart. Be wary of people trying to loan you money. I have worked in credit for many years. Credit comes with many hidden Costs, do not be fooled!
Share This
These icons link to social bookmarking sites where readers can share and discover new web pages.
This entry was posted
on Thursday, December 21st, 2006 at 1:00 am and is filed under Credit Cards, General, Saving Money.
You can follow any responses to this entry through the RSS 2.0 feed.
You can leave a response, or trackback from your own site.
