CREDIT CARDS CAN BE A COSTLY LESSON

Credit card debt continues to increase across the nation and savings accounts continue to decline. This is not a good omen when the cost of consumer goods continues to increase. During the holiday season the pressure to buy increases greatly. It’s important to evaluate your financial standing and your credit card debt and communicate your financial plans to your spouse and children.

Credit card balances should be kept low and paid off monthly. Resist the temptation to buy more than your income can support. In 2001, the average family had a credit card debt of $7,000; in 2004 this amount had grown to $12,000. This includes the 40% who paid their debt off each month. Those who carry a $7,000 debt balance pay approximately $1,400 annually in interest. Using this example, if you were in your 20’s, and if the average monthly payment of $116 could instead be invested in a retirement account, it would grow to approximately $180,000 at 5% interest or $330,000 at 7%, by the time you reached retirement.

Credit card companies are targeting young people, especially those of college age. The more immediate consequences of misuse of credit include being rejected for a car or student loan or even a home loan. It is important to budget your money and make a plan, determining budget categories and following your budget.

Every time you prepare to make a purchase ask yourself whether it is a need or a want. Much of what we buy falls in the “want” category. These things are okay to buy as long as they will fit in our budget and we can live within our income. If we have to purchase them with a credit card, with no clear-cut payoff plan, we are starting down a troubled path.

Here are 15 things that indicate credit card trouble:
Your credit card balances are rising while your income is stable or decreasing.
You are only paying the minimum amounts required on your accounts, or maybe even less than the minimums.
You are juggling bills and applying for new credit cards to pay off old ones.
You have more credit cards than a gambler has poker chips.
You are at or near the limit on each of your credit cards.
You consistently charge more each month than you make in payments.
You are working overtime to keep up with your credit card payments.
You don’t know how much you owe and you really don’t want to find out.
You have received phone calls or letters about delinquent bill payments.
You are using your credit card to pay necessities like food or gasoline.
Your credit cards are no longer used for the sake of convenience, but because you don’t have money.
You are dipping into your savings or IRA to pay your monthly bills.
You are hiding the cost of your purchases from your spouse.
You are playing the card game by signing up for every credit card that sends you an offer.
You have lost your job, or are fearful that you are about to, and are concerned about how you are going to pay all your bills.

If you feel you need assistance in developing a plan to deal with overwhelming debt there are free credit counseling services available. Be sure they are accredited by the National Foundation for Consumer Credit (http://www.nfcc.org/). Find a service near you by going to http://www.debtservice.org/.