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How you deal with your credit cards says a lot about you. Credit card use tends to fall into predictable patterns, and if you have credit card debt, it can be helpful to understand your own pattern to see how you got there. Here are some of the most common credit card types. Take a look and see if one of them fits you and what steps you can take to neutralize the downside of your pattern.
The Cruiser. You pay off our credit card balance in full every month. Whether you learned this the hard way or not, keep it up – you’re saving yourself a lot of headaches.
The Total Credit Card Noob. You are a total newbie to credit cards, and each month your find your credit card balance growing due to no apparent fault of your own. Watch out. By the time you figure out how credit cards work, your credit rating may be shot.
Downside: If you wait to find out the hard way what all those boring terms like over-the-limit fees and default interest rates really mean, you could find yourself choking under a mountain of credit card debt. Credit cards are a powerful financial instrument. Invest a little time in learning the basics about fees and penalties.
The Big Spender. Your motto? Charge now, pay later. Credit cards are a girl’s (or guy’s) best friend—an easy way to get what you want, right here, right now. That large plasma flat screen TV or new sofa set is just a quick swipe away, and, wow, your minimum payment is still only $30 a month! What’s not to like?
Downside: Financing your dreams with credit card debt amounts to shooting yourself in the foot. Paying only the minimum balance on your credit cards each month will keep you in debt for a very, very long time. Read up on the true cost of paying the minimum and see what that TV or sofa set is really costing you.
The Sparrow. There’s just not enough money to go around each month, and credit cards are the only way you can make ends meet. Inevitably, groceries, utilities, and those new shoes for your kids have to be charged and paid off over time.
Downside: Credit cards don’t really help you make ends meet; they just plunge you deeper into debt. Sooner or later the piper has to get paid, and it’s usually not a pretty picture. Don’t get lulled into thinking that things are all right. Begin to look for ways to cut back and make a budget, so you can meet your expenses each month.
The Star-Crossed. You lost your job, your wife got sick, there was a death in the family, and you had to charge expensive air tickets to fly out to the funeral at the last minute. Whatever the reason, life events trip us up from time to time. Most life crises put a strain on your finances, and getting a little help from your credit cards often seems the only way out.
Downside: Life happens. However, using your credit cards as your emergency funds unfortunately can turn an otherwise short-term crisis into long-term financial hardship. Look for ways to get rid of your credit card debt as soon as you can, and then start building an emergency fund to tide you over should you need an extra source of cash in the future.
The Cardaholic. You’ve had a rough week at work, and you know just the thing to make you feel better: hitting the malls. Shopping just makes you feel sooo good. After all, you work hard. Don’t you deserve a little break?
Downside: Using spending as a comfort activity may give you a momentary high. However, the low when the credit card bills come due is long and painful. Look for other ways to let off that steam and deal with stress.
