Apparently there is no such word as unstress. But there should be. If you’re stressing out over your finances, we’re pretty sure you’d like to unstress. When you’re constantly feeling stressed out over credit card debt, it can even cause physical symptoms such as headaches, heart disease, asthma (yes, asthma) and even obesity.
If you’re really seriously in debt, the following tips may not totally cure your credit card management problems but they definitely could help you, yes, unstress.
#1. When you can’t make a monthly payment on time, let your creditor know in advance
One of the bad things you can do is miss a credit card payment due date. No one knows for sure how much this will ding your credit score but it’s known that it will damage it considerably. However, most credit card companies are willing to help if you let them know before hand that you’re going to miss a payment. Just call the credit card issuer, explain the situation briefly and ask that it waive any late fees.
#2. Buy only what you need and not what you want
Before you pull out a credit card to buy something it’s important to make a smart decision. Try to buy only those things that you need and not just what you want. We’ve all made the mistake of using the word “need” to describe something we really don’t need but just wanted very badly. If you want to use your credit cards sensibly, it means recognizing which things you need and those that you just want and buying the former but not the latter.
#3. Negotiate lower interest rates
If you find you’re having a hard time making payments on your credit cards it might be because they have interest rates of 15%, 19% or even higher. Watch those credit card offers you get in the mail and you could find one with a lower interest than those you’re currently being charged. This could give you ammunition to talk your current credit card issuers into lowering your interest rates. Also, review the interest rate on your credit cards periodically to make sure you’re getting the best possible deal.
#4: Keep your credit to 30% or less of your credit limit
Your credit score is based on five factors. The most important of these is your credit history or how you’ve used credit in the past. Clearly there’s nothing you can do about that because, well, the past is the past. However, your debt-to-credit ratio is the second most important factor in your credit score as it accounts for 30%. This is a very easy thing to figure out because all you need to do is divide the total amount of credit you have available by the amount you’ve used up or your total balances. For example, if your total credit limit was $5000 and your balances totaled $1000, your debt-to-credit would be 20% which would be considered very good. On the other hand, if you’re balances total $3000 your debt-to-credit ratio would be 60% and that would have a very negative impact on your credit score. If you can either keep your balances low or pay them down you will maintain a good credit score. Not only that but lower balances are much easier to manage than higher ones.
#5. Read your credit card statements carefully every month
If you’re typical you probably tear open your credit card statement, glance at the balance and then file it away until you’re ready to make a payment. This can be a serious mistake. Not everything on your credit card statement may be accurate. You’ve probably heard of the massive data breaches that occurred recently where the personal information of Target shoppers and members of Anthem Blue Cross/Blue Shield were stolen. It’s most likely that these will turn into identity theft and you could be a victim. Read every transaction on your credit card statements to make sure they are correct. Also, check to see if your last payment was applied correctly and you were charged the right amount for all of your purchases. If you find an error you need to dispute it with your credit card company within 60 days. Even more important is to look for unauthorized transactions on your credit card. If you find unauthorized charges you need to report them immediately. Most credit cards restrict your liability to $50 for unauthorized charges and some will even waive that. But if you fail to report an unauthorized charge within 60 days you could find yourself stuck for it.
Check your credit reports carefully
This may not be one of the five credit card management tips but it’s still something you need to do regularly. And for the same reason that it’s important to review your credit card statements – which is due to the possibility of identity theft. The three credit reporting bureaus (Experian, Equifax and TransUnion) are required to give you your credit report free once a year. There is also the website www.annualcreditreport.com where you can get your credit reports individually or all at once. Most financial experts say it’s better to get them one at a time at four-month intervals so that you can be monitoring your credit year round. Whichever you choose, do get your credit reports and review them carefully to make sure you aren’t being victimized.