He spends faster than a speeding bullet. He's able to leap tall prices with a single card. It's a bird! It's a plane! No, it's Plastic Man! Fighting for refinancing, easy credit, and never-ending debit: Don't be that guy. When cash is scarce, many of us use credit cards to make ends meet. Americans have nearly $800 billion in credit card debt and even worse, late fees account for 77 percent of outstanding balances. Get real, come down to earth, and fight your urge to splurge. Credit card debt is fine for comic book characters, but in real life it's no joke. Here are tips to help you turn 'Plastic Man' into 'Super Saver.'
Land of the fee Last year Americans paid $14.8 billion in late payment and over-limit fees. In order to keep yourself fee free, simply try the following:
- On a first offence, call the company and ask to have the late fee waived. This will keep money in your pocket and your Annual Percentage Rate (APR) from skyrocketing
- If the due date for your credit card bill falls at a time of the month when you are always strapped for cash, ask to have the due date changed.
- If you know you are going to need a lot of extra cash soon for a special occasion or trip, ask for a higher limit on your card to prevent over-limit fees.
- Keep up with your payments. Make payments on time every month. This will improve your credit score and keep you from getting into further debt.
May the card be with you If you spend responsibly, credit cards can be a good thing: they can help beef up your credit rating for important purchases in the future. But be careful! Make sure you choose a card with features that can help you, such as:
- Low-rate cards with low Annual Percentage Rates and low or no annual fees
- Rewards cards that pay you back with cash, discounts, or even frequent flyer miles to reward you for your responsible spending
- Secured Cards ' if you have poor credit, these deposit-and-spend cards offer you a way back in the black
- Most importantly, stay out of trouble! Make sure that you spend less than 15 percent of your disposable income on monthly credit card payments.
APR WarsThink your Annual Percentage Rate (APR) is set in stone? Think again. The interest rates for 'fixed' cards can change dramatically with only 15 days notice from the lender. Make sure you read the enclosures your credit card company sends with your monthly bill to keep up with any interest rate changes that could drain your wallet.
Dynamic Duo Are you using credit cards to pay living expenses? Are you unsure of just how much you owe? If you answered yes to either of these questions, you're living on the edge and should consider serious steps for clearing up your debt problem.
Sources: Money.CNN.com, Kiplinger's Magazine, Bottom Line Magazine
First Aid for Your Wallet is written by Flagler College's National Champion Students In Free Enterprise organization. Questions or comments? Contact DWebb@flagler.edu.
2006 Flagler College, St. Augustine, Fla.