Managing Our Credit Cards – Are we Disciplined?

Posted April 7, 2009 by Bernz

I will never apply for another credit card again….. Really?

Well, yesterday afternoon I broke this rule. I have never open up a new credit card in almost 4 years. My wife and I only uses American Express card whenever we go shopping and pay this card in full every month. We like AMEX the fact that this is the only credit card that Cosco accepts and we do shop there almost every week.

credit-cards

As I said we decided on opening up a new credit card yesterday. A store credit card in fact! We were buying some stuffs for the Kids and the store was offering a whopping 40% additional discount if we open and actually use their store credit card, and the offer was good for yesterday’s purchases only. I was not very thrilled about this but the wife thinks it was well worth it.

This incident prompted me to write about how we can best manage our credit cards. Hope you find these tips helpful as we’ve use these ourselves in managing our credit cards when we use to have about 10 of them ourselves combined.

Here you go!

The first step in managing your credit cards is knowing what you’ve got. Make a list of all of the credit cards you have including store cards. Note the balance you owe the repayment terms and the interest rate on each card. The monthly minimum payments can be calculated using the balance on the card and the repayment terms.

Next is a step that many consumers are afraid to do because of a fear of being turned down. It is to request an interest rate reduction. Many card companies will consider such a request if you are current on your monthly payments and have a track record of timely repayments. Call the credit card companies and ask for a reduced interest rate. At the least, they will say no and no harm will have been done. At the best, you may be able to save hundreds of dollars per month in interest that you can now apply to paying down the principal.

Make a plan for paying off your credit cards. Determine how much total disposable income you can spare in your monthly budget and apportion it to paying off your credit cards. First, allocate the monthly minimum payment on each card. Then, apply the rest to the card with the highest interest rate. Keep a written record of your payments and balance reductions so that you can see progress and determine when the card will be paid off.

That’s all for credit card management folks……..

Now, let’s get back to our decision in opening up that store credit card. Would you have done the same considering the amount of money you will save availing of that additional 40% discount? And by the way, we save about $130 by using this card and we’re not planning on using it again.


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