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Curb card debt anxiety with small charges

Erica Sandberg

February 28, 2014

QHi Erica,

I haven't used a credit card since 2011. Before that, I was never late on my accounts, but felt I always got in over my head and felt I was drowning. I am prone to anxiety attacks and have a long history of depression. The stress of debt was killing me. After I paid everything off, I totally stopped and have only used the cash in my bank account. With help, I have learned how to manage my stress level. I think I would like to start with credit cards again. I never closed them, so do you think they are still open? If not, would they reopen them for me? Appreciate your time.  –Eric

ADear Eric,

It is normal to feel anxious when you've borrowed more than you can comfortably repay. Trust me, anyone with common sense can get a pang of panic at an abnormally high bill. Sometimes, just having a credit card can cause stress. However, because you may be more apt to experience those feelings, I want you to re-enter the charging pool more cautiously than others. As long as you're absolutely sure you can swim first, you should be able to avoid drowning in debt.

I doubt the cards you had are active since you haven't charged with them for so long. Check with the creditors. If you can dust them off and start spending with them again, that certainly would be the easiest way.

If the cards are closed, you'll need to reapply. That means you need to know your current credit rating. And it may not be too bad. Well-managed accounts remain on a consumer's credit file for 10 years from the date of last activity, which works in your favor. While you may have worried about the balances that you were acquiring, it's unlikely the banks that issued you those cards were fretting. As you consistently sent your payments by the due dates and whittled those balances down to zero, to the banks, all was copacetic.Ask Erica

The problem is that it has been a long time since you've added fresh borrowing and repayment information to your reports. Credit card companies and other lenders tend to be more interested in what you've done lately than what occurred in the past. For this reason, credit scores, like the FICO, rate more recent activity higher. After all, your circumstances may have changed since the date that you made your final debt payment.

However, that's just credit cards. Maybe you have a mortgage, are financing a car or have a student or personal loan that you're paying off. If so, activity for such accounts is appearing and is factored into your credit scores. If you're meeting those obligations responsibly, they're driving your scores up.

Get copies of your credit report from AnnualCreditReport.com and your credit score from MyFICO.com from at least one of the bureaus. If positive non-credit card borrowing and repaying information is on your reports, they might be good enough to put you into the highly desirable credit customer range, which is 750 and up. If not, they might fall somewhere in the middle of the scoring spectrum, which ranges from 300 to 850.

When you find out your scores, you're ready to apply. A good choice would be your previous issuers, but you're not limited to them. Check all the offers that are open to you now, and apply for the best in your category.

Once you have the card, keep spending and charging in check with a personal finance software program, such as Mint, Ynab or Quicken. Set up automatic bill pay to avoid worrying over payment dates.

Finally, if you ever feel like you're out of control again, stop. Put the cards away for a few months and regroup. Don't ignore those feelings. In fact, you may want to look into support groups like Debtors Anonymous for guidance.

Credit cards aren't for everyone. You may be better off enjoying a cash-only lifestyle. Do what's right for you.

Got a question for Erica? Send her an email.