Credit card offers can be very tempting, and we certainly get enough of them in the mail everyday. Even people with poor credit scores are inundated with these “pre-approved” offers.
Part of the allure of credit cards is the belief that you need one, “just in case.” As a result of such thinking, these offers are not discarded as they should be. Instead, you keep one or two to look at for those “just in case” situations.
Credit card companies are masters in the art of temptation. They can draw you in with promises of incredibly low APRs, zero percent balance transfers, and more. Plus, who wouldn’t want a card that you could personalize to fit your style? Recently, many credit card companies offer to design a card just for you, making it even more irresistible.
You may apply with the intention of using it strictly for emergencies. Isn’t that a safe and responsible thing to do, you say to yourself.
While you wait for your card to arrive, you fortify your intention of using it only when absolutely necessary. You won’t borrow money to pay for extraneous and unneeded items.
Maybe you forgot about the personalization, the colors, and the dolphins, until one day it arrives: your credit card, your instant money.
You rush to open it, and it is everything you wanted. You call the number, activate it and think about all the possibilities.
Now that you have the credit card in hand, ready to go, your mind drifts to what you can buy with it. You’ll definitely pay the balance in full each month, so a few little purchases won’t hurt. And isn’t it better to use it and pay it off than to let it gather dust in your wallet? A few small, inexpensive items, and then only for emergencies.
It is easy for your good intentions to be thrown by the wayside, and the consequences of credit card spending can be unpleasantly reiterated when you get the first bill.
And so you enter the cycle of debt in earnest. Instead of paying off the entire balance, which you told yourself you would do each month, you pay a minimum payment. Instead of cutting your spending, you continue to use the card and pay only this small amount.
It is easy to spend, but not so easy to pay. Soon, your card has neared or reached its limit. The solution? Another credit card, of course. You start using that one, maybe with the same good intentions of using it for emergencies only. Soon, you are making minimum payments on two cards, and your debt is getting out of control.
You buy more and pay the minimum on three cards. Before you know it, those precious twelve months are up, and you are buried in 23.6% APR rates and late fees. Your couple of hundred or thousand dollars owed has now tripled, and it is still skyrocketing!
You fool yourself to prevent the reality of your increasing debt and lowering credit score.
You make plans to pay off the entire balance with tax refunds or bonuses. But these get sucked up in everyday purchases, and still your debt grows.
The car payment is due, the mortgage is due, and you need a new water heater. The cards remain unpaid and your mailbox is as full as your missed and avoided call list. You have lost control.
Start boldly and decisively to take back control. Take your three credit cards and cut them up. Be merciless. If you work hard to pay them down, you don’t want the temptation to start using them again. Once you’ve paid them off, you want them out of your life.
If you do decide to keep one card, make a concerted effort to pay it off in full. This may mean making some sacrifices, but it is well worth it to dig yourself out of debt. Use if for emergencies, but make sure you have a clear definition of emergency. A great sale on shoes is not an emergency. Fixing your car so you can get to work is.
It is then time to begin answering those calls with a game plan in mind. Credit card companies are not fans of delinquent account holders, but they will work with you to get the money they want.
Work out a payment plan with them that you absolutely know you can pay. Realism is the foundation here.
It is easy to view credit cards as a way to get what you want without having to pay for it. The reality, though, can hit you when your credit score is in shambles and you are getting collection calls. This is real money, and it is your responsibility to repay it.
Time allowed this debt to get out of hand, and time is required to get it back in control. This problem will not dissipate overnight.
This can be frustrating as you pay and see no immediate effects. But as you continue your efforts, you will see both your debt load decreasing and your credit score increasing. In a year, you could significantly decrease the amount you owe, or you could let it continue to grow exponentially. The choice is yours.
Credit repair requires an immense amount of honesty with yourself and your creditors. It can be an uncomfortable position to be in, but if you learn from your debt mistakes, then you can start making real progress towards improving your financial life.