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The Top Three Reasons why Credit Card Balances Spin out of Control, And What You can do to Stop it

Credit Repair

You thought you had a good grip on your credit card usage. But then, before you knew it, you were staring at a maxed out credit card and no way of paying it. What happened?

For many of us, spending on our credit cards is not a well thought out decision. We spend – often carelessly – and simply assume that we will pay the bill at some later point in time. However, when that time comes, we often find ourselves short on money and in deep with credit card balances.

Don’t let yourself become yet another credit card statistic. Instead, make it a point to become more aware of your spending so that you don’t find yourself in over your head in credit card debt.

Here are the top three reasons why our credit card balances spin out of control:

1. We don’t pay close attention to our credit card statements – The next time your credit card statement arrives, make it a point to take the time to carefully read the statement. It is much easier to ignore the mounting charges when you simply tear it open and write a check for the minimum payment amount. Simply becoming more aware of your spending can turn your shopping habits around.
2. We fool ourselves into thinking we’ll pay it off soon – Did you ever charge something expensive and fool yourself into thinking that, although you don’t have the money now, you’ll pay it off down the road? For most of us, counting on future income is the wrong move to make. Don’t bet on future earnings to pay off your credit card balances because, chances are, you will be faced with other expenses that must be met and your credit card balances will be left neglected.
3. We carelessly spend – It is common knowledge that people simply spend much more when they have a credit card in their hands. The allure of buying what you want and not dealing with the payment now is very attractive to many people. If you find yourself carelessly spending on your credit card, make a list before you leave the house and stick to it. Also, take a moment before checking out and consider whether you really need to purchase that particular item. Just a few minutes and a little thought can save you from overspending.

Survey Reveals Surprising Statistics about Credit Card Usage and Marriage

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Are you being completely honest with your spouse regarding your credit card spending habits? If not, you’re not alone!

A surprising, recent survey of 200 Americans by a nonprofit agency, CESI Debt Solutions, revealed that 80 percent of married couples spend secretly on their credit cards. In addition, the survey found that almost 19 percent of married couples have credit cards of which their spouse is not even aware!

Most shocking, however, is that 38 percent of married people are worried that the revelation of their credit card spending would cause their spouse to seek a separation or divorce.

Secret Spending

What are married couples purchasing in secret? Nearly 35 percent of the individuals surveyed say they are buying clothing and accessories; 24 percent spend money on food and dining; nearly 20 percent buy beauty and personal care items on the sly; and almost 17 percent use their secret spending habits to buy gifts.

The survey revealed that nearly 60 percent of married couples keep their spending secret because they wanted to avoid problems in the marriage. Of the married couples spending in secret, 46 percent plan on paying off the debt before their spouse finds out and 11 percent plan on telling their spouse, but they just aren’t ready to do it yet. Finally, 27 percent of the married individuals surveyed say they will never tell their spouse about their spending.

The Consequences of Secret Spending

If you find yourself spending and keeping the purchases from your spouse, you may soon find yourself in a difficult financial situation that could jeopardize not only your credit, but your spouse’s credit, as well.

The best rule of thumb is to approach your spouse and work together to find a solution. If you think you have spending problems, it is also a good idea to contact a non-profit debt counseling service. In the end, credit card balances have a way of sneaking up on us, when we least expect it. Stopping the spending now and remaining open and honest with your spouse will help alleviate much of the financial problems experienced among married couples these days.

Teaching Your Kids About Credit Cards: The Basics Part One

Introduction

You want to teach your kids everything they need to know to get started on their own, right? Of course, you can’t literally teach them everything. There are those things that can only be learned through the school of hard knocks. However, you can prepare you kids for the real world by giving them great financial tips, including lessons in credit and credit card usage.

Credit Scores

Sadly, many young adults venture into the world of reality with nary a clue as to what a credit score means, let alone what one is. Parents can give valuable financial lessons by teaching these young ones all about credit scores. Sit them down and explain all about the three credit bureaus, how scores work and how they can be somewhat different from agency to agency, depending on the reporting practices of the creditors themselves. Explain to them what those numbers mean, what affects those numbers, the importance of maintaining a good score and what affects it could have in the future as far as their ability to obtain credit, loans, get a home or even a job.

Credit Cards

Credit cards have their benefits and downfalls. In this day and age, though, it is definitely a valuable tool to have, even for the young adult. Parents can prepare their kids by teaching them how to use credit cards responsibly. In part 2 of this series, we will discuss ways to start teaching credit card use early on. For now, we will address the basics that your kids need to know before they ever think of even obtaining a credit card.

First, be sure to explain to them that some cards do have annual fees, and that the balance due is not simply their purchase amounts, but also includes fees, finance charges and interest rates. Explaining interest rates is a smart idea as well. Teach them about responsible use of a card and paying the balance, including the pros and cons of minimum balances. Some of the other things to tell them? Make sure they can afford to pay back what they charge plus fees and interest. caution them against impulse purchases and cash advances, as well as purchasing a few dollar item on credit.

Teaching your kids to be disciplined with a credit card can set them up for a reasonably financially responsible future, so long as they adhere to these lessons. Adding in lessons about budgeting, investing, and saving wouldn’t hurt either.

Credit Card Usage Declines for Online Shoppers

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It appears as if credit card users are less likely to shop online with their credit cards than ever before.

Many individuals, as a result of the poor economy and mounting debt, have chosen to put away their credit cards and instead shop online using different payment methods.

In fact, according to a recent study by Javelin, entitled “Online Retail payments Forecast 2010-2014,” e-commerce grew nearly 11 percent in 2009, while credit card purchases fell below online payment services (such as PayPal and Google Checkout) and gift cards.

Online Shopping Increasing

According to American consumers, nearly 63 percent of us shop online, and this number is expected to increase to 78 percent by 2014. So, it only makes sense that credit card usage will also increase along with it. But, this doesn’t appear to be the case. The question is: why?

Many individuals, with the best of intentions, have decided to use other forms of payment when shopping online. For individuals who have difficulty managing their finances, this may be the best option. But for everyone else, using a credit card to make an online purchase is still often their best bet.

Credit Card vs. Debit Cards

Using a credit card for online shopping is a much safer alternative to using debit cards; for example, if a computer thief snatches an individual’s debit card numbers they could drain their bank account. A credit card, on the other hand, is protected from unauthorized spending. Keep in mind that even if your debit card is protected from credit card thieves, it can still wreak havoc on your life and your finances if your bank account is drained and checks begin bouncing.

Other individuals are simply moving away from credit cards altogether because of the state of the economy over the last year. Although, again, this may be a good idea in general, many consumers should consider the fact that credit cards can provide proof of payment and can often act as a receipt.

In other words, it may be best to keep at least one credit card for online purchases so that you can protect yourself and shop without worry.

New Places where you can use your Credit Card

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The convenience and practicality of credit cards has hit an all-time high; where once cash was king credit, cards have taken over. Let’s face it: credit cards are incredibly convenient and they eliminate the need to carry around cash.

With that said, here are some of the most unlikely of places you can now whip out your credit card:

• Courts and government offices – From paying fines to paying taxes, most federal offices and courts now accept credit cards as payment.
• Vending machines – Still digging in your pocket for change for the vending machine? You can finally put it away and use your credit card to purchase vending items instead.
• Churches – We used to throw cash into the church plate, but churches now accept credit card payments, thereby making the process of paying your monthly offering easier than ever.
• Salvation Army kettles – This year saw a truly remarkable sight – Salvation Army kettles accepting credit card donations! These specially designed credit card receptacles will help this nonprofit organization – and eventually many others – to accept donations when people don’t have cash on hand.
• Tolls and parking meters – You know the drill: you pull into a metered parking space, only to find that you are lacking the change to put in the parking meter. Newer parking meters, as well as toll booths, are now accepting credit card payments, thereby greatly reducing the amount of stress felt when you simply can’t find any spare quarters under your car seat.
• Fast food restaurants – You need a late-night snack or a quick family dinner and you’re short on cash. No problem: simply head to your local fast food restaurant and enjoy your fast dinner using your credit card. Many fast food restaurants now accept credit cards, even when you’re heading through the drive-through lane.

Although credit card usage has become more convenient than ever, it is still important to remain diligent when paying with a credit card. Only pay by credit card at trusted merchants and always check your credit card bill for incorrect charges.