Source: web
Problems with credit cards are a major issue all over the world, particularly during tough economic times. This is no different in Australia, but many people need a little help determining if they are in trouble (or how deep in trouble they may be).
Many consumers in Australia carry a credit card, but some do not heed the warning signs that signify a pending problem. Unfortunately, this can escalate to far more sever issues. That’s why it is important to educate yourself on what you should look for.
The Benefits
Credit cards come in many shapes and sizes these days. There are simple cards that give you convenient purchasing options and basic benefits. There are also cards that allow you to rack up airline miles whenever you make a purchase so that you can earn plane tickets down the road. Still, there are other cards that give you cash rebates and other benefits including several kinds of insurances. Thus, it is easy to see why so many people enjoy the benefits of credit cards.
The Dangers
Unfortunately, though, it is also very easy to get into trouble with credit cards. Because they are accepted at retailers all over the world, and because you need them in order to shop online, credit cards have simply become a normal form of tender. The convenience of using credit cards, though, also makes it very easy to use them when it is unnecessary. This means that you will end up spending more for the things you buy because of interest charges. Using credit cards once in a while is good because it can help you afford things that you might need and it can help you to establish a credit history. However, using them every day to pay for things that could be bought with cash is one of the signs that you might be getting into trouble
Signs of Credit Card Issues
There are many other signs that, if you are aware of them, will signal to you that there is a problem. For example, there are active signs:
- Having more than one card maxed out at a time (and want more)
- Using cash advances from one card to make a payment on another one
- Using your card to buy daily commodities (fuel, groceries, etc.) because you cannot afford it otherwise
- Constantly charging more than you make in payments every month
- Only making the minimum payments every month or making arrangements to pay less than the minimum required payment
There are also passive signs:
- Digging into your retirement or savings to make your credit card payments
- Ignorance of how much you owe, what your payments are, and when they are due (and the preference to not know)
- Hiding the truth from loved ones
- Signing up for new cards despite the existing balances of the cards you have
- Have more credit cards than you can physically carry (in your wallet)
Credit card Resolutions
There are many ways that you can go about trying to repair your credit if you notice any of these signs. While you might notice a lot of debt consolidation ads on television, you should investigate all of your options before you dive into something else because, to be honest, you might end up with even more problems!
Balance transfer options and debt consolidation accounts can help you, but only in certain situations. For instance, moving your debt to another card that has a lower rate will not make a difference if you have not established what your budget should be. You might “save” on a low rate in the beginning, but if you do not have a strategy for paying the balance off quickly you will quickly learn that it was not worth the effort.
The best thing to do is to consult with a professional who understands the intricate world of domestic credit. They may know of some programs that could help you. For example, if you own a home or a vehicle (or both) you may have more options than you think. Some debt counseling services are free and available through government programs—like the Rural Financial Counseling Service that is offered by the Department of Agriculture.
No matter how often you use your credit cards, you are just as susceptible to the dangers of credit problems. If you are intelligent about the way you use them and aware of the potential dangers, though, you will find it easier to avoid these issues.
