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Follow these steps to keep costly advances under control and get yourself back on track financially:
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1. Never get a cash advance from a credit card without reading the fine print thoroughly. Make sure you understand it; if not, call the creditor for clarification. Still not satisfied? Shop for a better deal.
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2. If you absolutely need a credit card advance, use your bank instead of an ATM. This way, you’ll avoid the usage charge tacked on by the ATM owner. Also, the ATM permits a much lower limit per transaction than your bank.
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3. A cash advance is a very expensive loan. Don’t forget that the interest starts to compound the minute you receive the advance. You need to pay it off as soon as you can — preferably by the time you receive the statement.
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4. Write down all of your monthly expenditures. Compare it with any monies coming in. Are you spending more than what you earn? If so, you need to curb your spending, or find a way to enhance your income.
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5. How much income is being used to pay credit card debt? If the amount is over 20%, it’s way too much.
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6. Debit cards are a great way to track where your money is going. If you have no cash and must use plastic, get into the habit of using the debit card instead.
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7. If you’ve used a credit card, be sure to deduct the amount charged from your checking account immediately. This way, you’re prepared to pay it in full when you receive the statement.
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8. If you need to use plastic, do not carry more than three general-purpose credit cards. Cancel any others that you may have.
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9. If your credit permits, transfer higher interest rate balances to lower cards. However, before you do so, make sure you know the right questions to ask.
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10. To get out from under faster, always pay the high-interest rate balances first, even if you owe more money on other cards.
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11. Ideally, you want to pay your balance in full. If that’s not possible, then at least pay back everything you purchased the previous month. At the very least, your monthly payment should always exceed the minimum required payment. To really get out from under, pay as much as financially possible each month.
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12. Tardy payments will cost you. Late fees can run you as much as $30. Remember too that late fees and interest rate bump-ups go hand-in-hand. Debtors who pay late frequently see their finance charges raised by their creditors.
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13. Pay yourself first. As soon as you receive your paycheck, put some of it aside so you can build an emergency fund. It’s the best way to unlearn the habit of using credit cards. It’s okay to start with a small amount. Even $5 a week will accumulate to $260 over a year’s time. Put that into an interest-bearing account and watch your money grow.
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