Most of us use credit cards and sometimes we fail to make the payments on time. But if this habit continues, sooner we will be buried under the huge burden of financial debt. If you follow some simple steps, you will be able to manage your credit card dues in a better way.
Most importantly, never spend more than what you can pay. The income and spending ratio should be around 3:1. Now suppose you have already spent a lump sum amount on your credit card and the burden is on your shoulder. What should you do? Reduce all of your expenses as much as you can. As soon as you get your pay check, clear off the dues of that month instantly. Do not wait for the due date to come. Try to pay at least 3 to 4 times more than the minimum payment required. You can also go for a balance transfer. Transfer the balance from your low-interest credit card to the high-interest credit card. In this way you will be able to reduce some of your financial burden.
Credit cards are very handy and play a great deal in times of emergencies. If you can use it efficient, your financial status will become rock steady.
Credit cards are cool for teenagers because they see those plastic cards as certificates of personal success. By owning a credit card, teenagers are lulled to believe that they are grown-ups and free to do what they want.
Since credit card companies are unstoppable on sending credit offers to susceptible teenagers, the only thing parents can do is to be good teachers on credit card management. Here some guidelines to help:
1. Teach your teens to treat credit cards with healthy respect.
Show various calculations of interest rates against length of time to pay off the debts. Highlight the total payment on interest alone when monthly payment is on the minimum.
Upon realizing that the interest amount exceeds the principal sum of debt, your teens will think twice on using their credit cards on anything trivial. They will learn that credit cards are for emergency only.
2. Help your teens choose their credit card.
Teenagers often get into various credit troubles. You may prevent these happening to your teens by starting them slow. Look for the credit card that lets you or your teens load small amounts via electronic transfer. This way, your teens will not reach the real credit limit.
3. Discipline the big spenders by not bailing them out.
Teenagers sometime tend to listen more to peer pressure than their parents. If this happened to your teens, do not let them off the hook easily. Help them find ways to pay off their debts by themselves but do not contribute any money to hasten the payment. Make them double or triple the amount of monthly dues to finish the debt within a short time. Let your teens see and experience how irresponsible use of card can lead them to tight situations.
4. Practice what you preach.
Be a role model to your teens. If you had bad experiences with credit cards, share them so that they could learn from your lessons, too. Show them that you use your credit cards with great care.