Credit cards are a blessing if you know how to stay in control of your use. Are you managing your credit card usage well, or could you be starting to get dependent on them? Read on to recognise the 4 telltale signs of credit card dependency. If you exhibit two or more behaviours, then you could have credit card dependency, which could affect your business funding opportunities as well.
Do you exceed your credit card limit too often?
Each credit card comes with a pre-set limit. If you find yourself exceeding your set limit more often than not, you could have a problem.
The lender will charge you over-the-limit fees, which is an expense you really don’t want. Also, if you consistently use more than your limit, the bank could actually decrease your limit or increase your rates. The lender can also close your account. All this reflects in your credit history and can severely impact your credit score. A bad credit score can affect your business funding.
Do you own several credit cards?
Multiple credit cards can be a convenience, especially if you travel a lot or to keep expenses separate. Also, multiple cards can positively affect your credit report. However, they can bring a host of problems too.
There is the stress of paying multiple cards at the end of the month. If you miss the dates or mix up the amounts, you can face a late fee as well as increased rates, which can impact your credit score.
An inactive card will reflect poorly on your credit. If it has yearly fees, you are just adding on unrequired expenses. Multiple cards also increase your chances of running up a debt. Did you really think that a new card will help manage your existing debt?
Lastly, applying for too many cards in a short time can affect your credit score. Yes, it all comes back to you and your business.
Have you availed a line of debt to pay for your credit cards?
Have your credit card bills ever gotten so out of hand that you took a line of debt – against your home or business – to pay it back?
This instant loan is may not be the best decision. A line of credit, say on your home, is a secured loan which means the bank can possess your home and sell it if you don’t clear your loan. The bank cannot do the same with an unpaid credit card. Weigh out the possibilities and decide if the instant loan is really worth risking on.
Do you pay the minimal amount every time to avoid penalty?
If you pay the bare minimum on your credit card dues and believe that you are doing a good job, you are not. At this rate, you will put yourself in a cycle of debt that you will not be able to come out of easily. Not to mention, that the penalties will keep piling up as well.
Pay a large sum whenever possible. Forgo other lesser critical expenses, but finish clearing your bills. As a thumb rule, avoid carrying forward any amount in your bill for more than two billing cycles.
Tackling credit cards is simple: Get only as many cards as you will actually use, and use only when really needed. Pay your bills fully, and on time. Choose the best strategy to tackle your credit card debt quickly.