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Some Credit Card Warning Signs

October 23rd, 2012 · No Comments · Credit Cards

Kristy Welsh

by Kristy Welsh

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Q. My boyfriend says I am using my credit cards too much. I don’t think so, my credit score is still good and my credit card debt isn’t too bad. What should I be looking for?

A. I would consider what your boyfriend says carefully. When a person has a spending problem, they often try to hide it from other people as well as themselves. It’s great that you still have a good score, but this could change if you rack up too much debt. The amount of credit you have left on your credit cards is a huge factor in calculating your credit score. You need 75% of your available credit freed up for the best scores.

There are some telltale signs you may need a credit card lock down for your own financial survival:

Forgetting a purchase

One sign that a person has a spending problem is when they have “purchase amnesia”. For example, if you order products advertised on late-night television programs and then forget you made the purchase the next morning, that’s a red flag.

Paying with more than one card

If a you can’t make a purchase without using multiple credit cards, it probably means you only have a small amount of credit left on various cards. Instead of spending up to a specific limit, aim to charge only what can be easily paid off at the end of the month. Better still, pay off each credit card charge through online banking each day. Some retailers will allow a person to make a partial payment with one credit card and a partial payment with cash or a different credit card. Paying with more than one card indicates an over-dependence on credit.

Shopping to alter a mood

People with a shopping addiction often shop when they are feeling depressed or bored. Unfortunately, the mood-altering effects of the purchase are often gone as soon as you come home with your new item.

Making excessive balance transfers

Although it occasionally makes sense to transfer a balance from a credit card with a high interest rate to a card with a lower interest rate, it’s financially dangerous if that becomes a way of coping with escalating debt. Instead of moving balances from one card to the next, come up with a spending plan with realistic limits and a goal of paying down your cards.

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