I never thought I had a problem with credit cards. I could just sail along, for the first three weeks of the month, using my pay cheque only to run aground with ten or more days to go before I saw hide or hair of any kind of income. Enter the credit card. I’d use it for groceries, drinks at the pub on Friday night, birthday presents, anything that could possibly tide me over. And when the new month came, and my pay was safely in my bank account, I’d do it all again. All of these are classic signs of credit card misuse, or financial duress. Here are the crucial characteristics.
Carrying Over A Balance
Obviously, if you’re unable to pay off your card at the end of the month, you are using your card at a level that your income can’t support. Or you did at some point. If you’re not in debt recovery mode, and working to rid yourself of the extra balance, now is the time to make the shift.
Not Knowing Your Balance
Not knowing how much you’ve got on your card or avoiding looking at your monthly statement is a fairly good sign you’re uncomfortable with your credit card usage. Beyond exposing yourself to fraud, it also means you’ll be unable to come to grips with improving your credit card balance. Rip off the bandaid and find out what you’re dealing with. Check your statements every month. If we’re okay with flashing the card at the purchase, we’ve got to learn to be comfortable with come statement time.
Using a credit card for essentials, such as utilities or groceries, is usually acknowledged as a symptom of financial duress. Some people do it in order to accrue rewards points, but generally, it’s a good idea to have some cash saved every month for essentials and to buy basics from that account.
A very obvious sign of financial duress- cash advances are the Catch 22 of credit cards. We advance ourselves a bit of cash to tide ourselves over, only to become even more cash-strapped due to the high interest that gets charged from the second we take the money out. If you’re advancing cash off your card, stop now. Start a repayment plan, and create a budget that allows your more disposable income at the end of every month.
More Than One
Unless you’re a senior partner in a big law firm, a big wig in the telecommunications business or a star of the investing circle, there’s not such a great need for more than one personal credit card. If you’re carrying around a couple of cards, cancel all but the one that has the lowest interest. Transfer all the balances and look at how you can repay the whole amount in a sustainable manner.
Like anything, a clear sign that you’re misusing your credit card can often be the periods where you swear off using it, only to buy a carload of items and then revert back to the guilt cycle. If you yo-yo on your credit card, look at how you’ve structured your budget in order to allow more spending money, or allocate disposable income every week, knowing that once it’s gone, it’s gone.