Is it possible that you use your credit cards a bit too much? Maybe because you are an impulsive buyer? Just because you haven’t yet gotten a call from your credit card company, to talk about all your expenditure, it doesn’t mean you don’t have a serious problem.
If you can relate with any of the four points we’ll be discussing in this article, it’s a strong sign you are abusing your card and will need to make some changes to your spending behavior urgently.
#1. Low credit scores
Credit scores are an objective way of appraising the amount of risk you pose to potential lenders. They are therefore a very important metric you should carefully monitor on an ongoing basis. If your credit score drops suddenly, you should consider this the first warning sign that your credit accumulation is getting out of hand.
#2. When the minimum payment is all you can afford
Normally the minimum payment keeps the account current, but that is all it does, and if you are only able to meet up with your minimum payments it is going to take a longer time for you to pay off what you owe. When the minimum payment is all you can afford, that is a pretty sure sign that your debt has become unaffordable and you are abusing your credit cards.
#3. When you move debts around
If you are in the habit of moving debts around, it could be a sign of a problem. 0% APR transfer cards can be a great deal and can save a lot in interest payments, but they become ineffective when it becomes a never ending cycle. It will be useful to remember that even a 0% interest bearing debt is still a debt and should be treated that way.
#4. Frequently maxed out credit cards
Maxed out credit cards are bad in so many ways, as, to state the obvious, you would have no available credit when you need it. One of the major reasons to carry a credit card is to use them for emergencies but by using it all up, you could be stranded when the need arises.
Also, maxing out your credit card will affect your credit score and make it difficult for you to obtain any kind of loan.
If your credit cards are frequently maxed out, it’s a sign you might need to reform your spending habits.
What you can do about it
Once you come to the realization that your credit card debt is getting out of control or it is gradually getting to that stage, it is time to make an adjustment. You should endeavor to stop spending money on irrelevant items, and when dealing with credit card companies, always negotiate for lower credit rates.