The convenience of plastic money is comforting.
I really wanna go out on Friday night, not to worry I’ll charge it and pay it off with my next check next week.
If you couldn’t afford it this Friday what makes you think you could afford it next Friday. Bruh, that is absurd.
A balance of $1000 can take up to 5 years to payoff!
That is if you are making the minimum payments. They legally have to tell us this now. It is listed on every credit card statement. Thanks to the Credit Card Act of 2009. There is no excuse for stupidity.
Obama was trying to help us fix our credit scores with this law. It’s OK, you are not alone. By the end of 2016 credit card debt in the US surpassed 1 Trillion Dollars, according to a recent CNBC article. Credit card companies make on average $1,300 per household a year on credit card interest payments. That’s $1,300 just to borrow some money to buy something you couldn’t afford in the first place. That’s ridiculous! Before plastic money people only spent what they had; now people casually live beyond their means.
How Did The Balance Get So High
Society has conditioned us to want the new shiny object right when it comes out. And for some reason we need to buy new things on certain holidays. In addition there are the impulse buys at the gas station or checkout line. Or charging your credit card for household items that are a necessity.
For whatever reason your balance can increase very rapidly. When I received my first credit card I felt ecstatic. I felt like I was finally an adult. I couldn’t wait to use it. It was almost like I had to prove that it even worked. Improving my credit score wasn’t something I ever cared about.
Read The Credit Card Agreement!
Almost anyone can get a credit card. You don’t need to take test. Hardly anyone reads the agreement that you have to sign. Do you actually know if you have a variable or fixed rate card? You should know! It’s despairing to see people use credit cards like it’s free money.
In my own experience after you’n f****d yourself by spending too much money. Things get worse. You start missing payments; Then the endless phone calls start and the letters in the mail. You have to stop them from sending you bills in your mailbox.
You are left with only one solution to solve your problem…
And if that doesn’t get you arrested you could cut the credit cards up. Cut that motherf****r. Depending on how old it is you can just bend it back and forth until you can tear it at the crease, but that is just not that satisfying. Find a sharp pair of scissors and have at it.
Real Advise (read this)
Pay off the card with the lowest balance first. And once you have that card payed off just forget about ever using it again. The best thing about this is that your credit score will get a boost.
Credit reporting agencies like to see a low credit utilization. Conversely if you have 4 credit cards all near their limits, your credit score is getting seriously f****d. This drops your credit score very fast. It is a strong signal of unreliable credit usage.
Therefore you should not have any of your credit cards near the limit at all. Evenly disperse your credit usage across a couple cards.
Continue to Learn About Credit
I believe people should have to take a finance webinar before getting their first credit card. People have the idea that “Now I have $500 of free money now I can have fun!”. The only good thing is that your credit score can recover quickly after having a high utilization. Just pay the balance down.
Another quick tip is that you don’t need to spend money on your credit card to build credit. The three Credit reporting agencies Equifax, Transunion and Experian will start taking record of your credit history when you get your first credit card. As long as there are no late payments and you keep your balance low, you shouldn’t have anything to worry about. Your account and credit rating will remain in good standing. Until Black Friday!!
Building a Good Credit History
Building a good credit history does not mean that you have to continuously buy items with your credit card. Your credit history begins on the day that you open your first line of credit. Only time can improve your credit history.
Add new lines of credit slowly over time. However, do not open multiple lines of credit at once. This can be harmful to your credit score. This is seen as a sign that you are strapped for cash.
Furthermore once a balance is down to zero you can keep it at zero for as long as you like. I have had one card on zero since 2012. The more available credit you have the better it is for your credit score.
Here is a crazy story. Walter Cavanagh of Santa Clara, CA has nearly 1,500 credit cards and a nearly perfect credit score. Read about him here in a 2016 Time: Money Magazine article.
Walter is only using one of his 1,500 credit cards. He has an extremely low credit utilization rate. This makes him look extremely frugal to the credit reporting agencies. Be very careful because every time you get your credit checked your score takes a hit. And too many hard inquires in a short period of time can make you look desperate for credit. Only add 1 or 2 new credit cards each year.
The secret to credit cards is do not use them. Are you surprised? Hopefully not. Credit cards are the devil, ladies and gentleman. They should only be used in emergencies. Then you have to do everything possible to get it paid off as soon as possible. Lets not give those f****s anymore of that $1,300 they plan on making off of each American household every year.