How to Cut Down on Credit Card Use

By Mark P Cussen, CFP, CMFC

Economists are saying that the recession is over, but several major banks recently stated that the default rate on their credit cards were at an all-time high, and likely to get worse.

According to a Reuters report, credit card defaults are attributed to unemployment, which rose to a 26-year high of 9.7 percent in August. Sadly, the jobless rate is expected to continue at more than 10 percent by year-end.

Here are a few things you can to do keep from becoming part of this unfortunate trend.

Step 1
Request a debit card from your bank or brokerage firm that you can use like a credit card.
This will draw your purchases from your account rather than increase your debt. Of course, you must make sure not to spend more than is in your account, otherwise your account will be overdrawn and you will end up owing the bank money.

Step 2
Keep only one credit card at a time.
Don't carry it with you, except when you know that you will need it for some specific purchase. Never carry it with you when you are just shopping or browsing randomly. Impulse buys get many individuals into trouble, so it's safer to leave the plastic at home.

Step 3
Ask your credit card company to keep your limit low as well as your rate.
A high limit is an invitation to splurge for those who have no self-control.

Step 4
Don't put any more on your card than you can pay off at the end of the month.
This not only keeps your card balance under control, it saves you a great deal of interest, as many companies charge no interest to those who do this.

Tips & Warnings
If you request a debit card, make sure to keep track of your balance. Many banks offer online banking and they can also send you a text message with your balance amount.

How to Cut Down on Credit Card Use originally published on eHow.com

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