Having a credit card is almost essential these days. You need them to book a hotel, rent a car, or shop online. “Having credit cards is smart if used correctly, in relation to building a good credit score.” says Christopher Viale, chairman of the board of the Association of Independent Consumer Credit Counseling Agencies. Viale also cautions that, “The pitfalls of using credit cards, not just for the purpose of building your credit profile, obviously involve the temptation to overspend.” Obviously, overspending could lead to debt and possible damage to credit ratings. Here are five signs that your cards are no longer a credit-building tool or a points and rewards asset, but rather a debt instrument.
- You are having difficulty making a payment – If you are having difficulty making the minimum payment on your cards, that’s a red flag. Make sure you make payments on time. Consider using cash to make purchases while paying off your credit debt.
- You spend for rewards: The rewards that come with using the credit card are advantages of using the card, but you do not have to spend to earn the rewards. Remember that rewards are benefits for purchases you were about to make. If you’re overspending to make a profit, it may turn out not to be a huge profit if it hurts your credit or your budget.
- You are stuck with a product below par: It is a red flag that you are exceeded if you cannot qualify for cards with interest rates below 18-20%. Strong credit scores entitle consumers to competitive terms, so shop around to make sure you get a good rate.
- You have more cards than you need – the more credit you have available, the easier it is to overspend. Put a limit on the number of cards you will have. If you have found a card that is a better fit for you and your expenses, save the old cards and do not use them.
- Use your card as a status symbol: Credit companies have developed fancy cards to attract people’s attention by using bold colors or materials. These cards often carry high annual fees and tend to have high credit limits. The excitement of carrying a luxury card can soon wear off if you have a low interest rate or overspend.
If you find yourself continually stealing from Peter to pay Paul, but Peter and Paul still want to get paid, then you probably need to find a way to satisfy both of them and get them off your back. Finding an experienced attorney is important to help you develop a plan of action to deal with your credit card debt.