Bad Habit Budget Busters - Using Credit Cards

Do you love your credit cards? They are a major stressor for most Americans. We love them. We hate them. We feel like we can’t live without them. I’m here to tell you, we can.

If you want to get a grip on your financial state, look at your credit card habits. How much are you contributing to the credit card company’s overall financial health? Unless you pay the entire balance of all your credit cards’ bills on or before the bills’ due dates, you’re losing literally thousands and tens of thousands of dollars - and they are gaining that windfall.

Example:

Suppose you have only one credit card with a limit of $10,000. Slowly over the years you’ve allowed the balance to creep up to that $10,000 limit. However, you’ve paid on time every single month and your interest rate is only 5.5 percent. Do you realize that if you start today and don’t charge another cent on the card, and if you pay the minimum amount each month, it will take you 20+ years to pay off that card? And that’s with a much lower interest rate than most people have today.

Even at the low interest rate of 5.5%, you'll pay about $22,000 to the company for the privilege of buying $10,000 worth of product and services. If you have a 10% interest rate, you'll pay almost $30,000 for those products and services. Some people might call that insane.

Imagine what the payoff would be if you were paying interest at 19.99% or even 29.99%? This is why it’s imperative that you pay off any and all cards as soon as possible. I realize some of you are still in survival mode financially. But as soon as you can, act on the following advice.

Question: What can you do?

Answer: As soon as you can, start paying off your credit cards. No matter your circumstances, do your best to make this a high priority. Start with the card with the highest interest rate. Pay as much over the minimum due as you can each month-even $5.00 will help. Pay the minimum payment on all the other cards until the top card is paid off. Then go to the card with the next highest interest rate. Continue until all your credit cards are paid off.

In addition, read every article you can find on budget cutting and make a list of other things you can do to cut your expenses. Today is the day to take control of your financial situation.