I’m being very informative this week! I guess with all the things going on, you can never have enough knowledge on how to make your life simpler by avoid money problems! Today’s topic:
Credit Cards!
The bane of your existence if your under 30 and got those cards while you were in college. I know that I sometimes regret the day that I signed on that dotted line! Or better yet, that I had been better advised on credit card etiquette.
Yahoo! Finance had this great article on how bad are your credit card mistakes, you know what mistakes I mean: paying late or the bare minimum, missing a payment, or just having a slew of cards for no reason. They rated all these bloopers on a scale of 1-10 to give you an idea of how bad your doing! Now, some of these are no-brainers, but others are kind of shocking!
Most Shocking:
Debt Settlement Plans – they rank at 9.5 on the BBAADD scale! Did you know that while yes, this helps you pay less back to your debt, you also take a tax hit? Apparently, it counts as income during that tax year AND you credit will be tarnished! According to yahoo, next to bankruptcy debt settlement is the most negative thing you can do to your credit score! WOWZERS!
Cash Advances – these rank at an 8. I have yet to take a cash advance on a card, and from the looks of this, I won’t be anytime soon! What always scared me was the alarming higher interest rate on them, but apparently you also have NO grace period.
Not so shocking:
Maxing out your CC – HELLO! that isn’t rocket science. Every one knows that! On this scale it ranks a 7. This impacts your credit score, apparently pretty heavily because 30% of your score is based on “credit utilization” — the amount of credit you’ve used relative to the amount you have available!
Having too Many Cards – Guilty as charged! AT one point I had to get rid of a few because they left too much room for me to act up! While this doesn’t really affect your credit score from what the article says, it does say that it isn’t worth your wild to have all those cards because 1. you’re not getting enough value from the card to make it worth the high interest rates. 2. additional complications from additional bills and junk cluttering your inbox and 3. You’re likelihood of missing a payment is higher and the potential for identity theft!
There are a few more on this list, so I definitely think this is worth the read! Check it!
This was a great article! In particular the debt settlement being such a negative thing!!!! Geesh! I hear they are also lowering credit limits which actually lowers your credit score!!!
the thing about debt settlements is that if you owe 20,000 and you settle at 5,000 you have to pay on the difference. in this case its as if you made 15,000 so you’re taxed on that. im not an expert but i hear if your account is in collections there is a way to have those charges removed from your credit report (you have to be proactive in doing so though)
having a credit card requires a lot of discipline. less for some, more for others. debt is good. too much debt is bad. balancing that equation is, well, not easy for most people.