Financial Tips | Debt Management

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1/14/09

Credit Card Wisdom

Spending on credit cards can become a very large problem if you do not keep track of what you are doing. If a you have one credit card, it is easy enough for you to keep track of your spending. Additionally, if a credit card has a low credit limit, that limit will be a ceiling for your spending habits. Keep in mind that I am not suggesting that you use your credit card until you "max it out." I am merely suggesting that the credit limit, if low, will prevent you from getting too deeply into debt. However, a low credit limit is like a double edged sword because even though it will prevent you from charging too much, a low credit limit is looked upon with disfavor by lenders because it means that you either are new to credit or are not a responsible user of credit.

As I stated, if you only have one credit card, it is relatively simple to keep track of your spending. However, what if you have more than one credit card? Two credit cards should still be easy to track, but what about three, four, or even five cards? At what number does credit management become difficult? This is the problem that many credit users face.

Many people become seduced by credit cards. They get a feeling of power and start to abuse their credit card privileges. Abuse of credit cards is always a problem, but this problem magnifies when you have more than one card. Could you imagine the financial burdens that would arise if you had five credits and all had been abused? The point is, wise credit card use goes beyond the traditional good advice of paying your bills on time, paying more than your minimum payment, and keeping your debt low. Wise credit card use includes knowing when you are abusing your credit and knowing how to stop before the problem becomes insurmountable.

The best way to prevent credit card abuse is to keep track of your spending. If you do not keep track of your spending, you will soon discover that your credit card bills will start to spiral out of control. This is sad because credit cards should never be a cause for financial concern. Credit cards should only benefit your situation. Therefore, wise credit card use denotes that if your credit cards are not improving your financial situation, you are abusing your credit cards.

Use your credit cards wisely and you will reap great financial rewards.

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