5 danger signs of credit trouble

By Jessica Bach

1) Using credit and cash advances for items that should be purchased with cash, like gas and groceries. - Charging essentials, such as gas and groceries, on your credit card isn't always a warning sign. Sometimes it's just better than carrying around a lot of cash. As long as you pay off the bill in full by the deadline, you won't owe any interest. But if you routinely charge essential expenses and don't repay those bills right away, then it's a sign that you're living beyond your means, and you need to review your budget and find a way to pay for your essential expenses without going into debt.

2) You receive a credit card bill in the mail and cannot pay it in full, or pay any of it at all. - Each month, you should be making your payment on or before the due date. Late payments can hurt your credit, as well as result in late payment fees and a penalty APR from your issuer.

3) You decide to pay the minimum payment each month. - On each monthly statement, two important amounts will be listed: the total balance and the minimum payment. By paying off the entire balance each month, you’ll avoid incurring interest. By paying the minimum payment, you’ll avoid late fees, penalty APRs and damaging your credit, but you’ll still have to pay interest. So while the minimum payment will keep you from hurting your credit, it will cost you a lot in interest charges.

4) You are transferring balances from one credit card company to another. - Transferring cards are great for people trying to get out of debt and save on interest in the process. But, if you find that you’re transferring a balance from one card to the next frequently, you’re in trouble. Balance transfers typically have fees between 3% and 4% of the transferred balance. Which depending on how much you’re transferring, could be a big fee.

5) Regularly charging up to your credit limit. - If you routinely max out your credit cards, then your spending is probably getting out of control. And creditors view this as risky, so they've been increasing interest rates and lowering the credit limit for people who charge the maximum, so it’s tougher to get out of debt.
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What can you do/where can you go for help?

Only put on your credit card what you can reasonably afford to pay off each month. If you’re already in credit card debt, discontinue card usage until you’ve paid off the balance in full.

If you forget your due date on a regular basis, you should schedule automatic payments each month. Otherwise, set your online account options to email you before the due date so you can pay on time.

If you can’t afford the minimum payment, you’re in trouble. Cancel your card, spend less and find a better job to make more to pay off your debt. Generally, you can ask that your first late payment offense to be waived, but most issuers will not let it slide without penalty a second time.
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