The Seven Deadly Sins of Credit Cards

I remember the day my first credit card arrived in the mail. A rush of both terror and excitement made its way through me. Terror because I had watched both of my parents go bankrupt due, in part, to overuse and misuse of credit cards. Excitement – because I had a plan. I was going to avoid the seven deadly sins of credit cards and use mine powerfully and thoughtfully.

Can you avoid the following seven deadly sins?

Wrath
Don’t get angry when your monthly credit card statement is spiralling out of control! Make a commitment to only spend on your credit card that which you can afford to repay in full each month. The interest on credit cards is what can kill you, and paying off the monthly minimum will leave you hand cuffed to your card forever! Get your credit card under control and remember “credit” does not mean “free money”.

Lust
Just because you see a new credit card that comes in pink to match your shoes does not mean you need to get it! I recommend only one extra “emergency” credit card – if you’re responsible enough to NOT use it! “Emergencies” does not mean the new XBOX being pre-released! Keep it for emergencies such as medical emergencies or another credit card being denied when you’re travelling overseas due to your credit card company suspecting theft. Also make sure your emergency credit card has no annual fee.

Greed
Wo-hoo your credit card company has just offered you another limit increase! STOP! Consider the following:

• Each time you get a limit increase it will affect your overall borrowing ability (the higher your credit card limits the lower your borrowing power for assets like a house!)
• The higher your limit the more someone has access to if you’re the unfortunate recipient of identity fraud
• Banks quite often offer limit increases to people who cannot sustain more debt
• Do you really need the increase or are you just excited you’ve been offered it

• Put your credit card in a glass of water and freeze it. Commit to not buying anything until the water has melted (no microwaves!) and you’ve had time to fully consider the purchase
• Get a low limit on your card (preferably one that doesn’t have a limit high enough to afford the new Manolos!)
• Limit your online shopping to funds you’ve earned in your paypal account (that’s right – ebay your old stuff before you buy new stuff!)