Whenever you need some extra disposable income - be it for gifts at Christmas, extra groceries or a lavish break that you just cannot do without - they seem like a good idea at the time. However, credit or store cards are dangerous if you do not use them responsibly. They are part of a wider sphere of personal debt management and can sometimes seem like an extra avenue when attempting to get out of debt. However, the introductory offers are just that and it is important to remember that in the long term they are not a solution, although in the short term they may definitely seem that way. This article highlights some of the major problems involved when choosing credit or store cards as part of your debt management strategy and underlines the methods to put into practice to ensure that you do not fall foul of them.
The first step when choosing a credit card is to make the right choice. This may seem like an obvious statement, but there is such a large pool of credit card suppliers that it is imperative to compare one to the next. If a merchandiser that is offering credit or store cards approaches you check the expiry date of the promotional offer - the chances are that a deal will not have to be agreed immediately. Give yourself time to compare the offer to others around and make sure you make a note of the full interest rate, as often this can be overshadowed by the period of interest-free offers on balance transfers and new purchases. Remember that this is not an indefinite period and it is more than likely that when the months of interest-free payments are over you will still have debt to repay.
Once you have chosen the card that is best for you and transferred your balance make every effort to pay more than the minimum payment each month. This interest-free period is a fantastic opportunity to reduce your total debt and while the minimum payment will be wholly deducted it is an essential part of effective debt management to maximise your interest-free opportunities. Failure to do this will mean that the total amount payable will increase in the long-term, while in the short-term lulling you into a false sense of security.
These guidelines are not a solution to those who already have a number of credit cards fully tapped with credit. Once they reach the credit limit the interest is generally so high (depending on each individual card’s credit limit) that it becomes nearly impossible to pay them off. Once in this situation it may be worth considering consulting a debt management company as they can act as mediators between debtor and creditor to arrange a legal settlement that ensures payment of debt without crippling the debtor. Whether you have reached this stage of development or not, the key to managing your debt lies in minimising your interest payments while maximising your opportunities. Only you can decide whether you are in a position to do this yourself.
