Credit Card Users & Financial Planning

Credit cards can be an excellent tool to help you manage your finances. But sometimes we make poor choices, or sometimes the events in life take us beyond our expectations and we are left to foot the bill. Perhaps you have had a few months of extra, unexpected expenses that you are now paying for. What can you do?

Gather together all of your credit card bills and add up the amount that you owe. Factor in the extra expenses you haven’t heard on your credit cards since you receive those bills. Add to that about ten or twenty per cent, which is the “whoops, I forgot about that” factor. Then, with that figure, start shopping around for a loan.

Get the loan and pay off your credit card bills. If you think that you may still use your credit cards, you may want to hide them away so that you reduce the temptation to use them. Now, instead of having several credit card bills at a high interest rate due by the end of the month, you now have one bill that is due once a month at a lower rate. This is called consolidation. At first glance it may not seem obvious why you’d want to do this but there are two reasons:


The first reason is that you will save a lot of money on interest rates. In fact the interest rates might be as much as half of regular credit card interest rates. The second reason is that you will get one bill with a fixed amount due every month rather than several bills with several amounts due throughout the month. This will help you budget.

Credit cards can be an excellent tool to help you manage your finances and buy the things you want or need. But when things go on a ride and your bills get out of hand, which happens to even the best of us, choosing a personal loan as a way to consolidate those bills will help you reduce your interest rates and set up a fixed amount of payment. Reduced interest rates will ultimately increase the amount of money you keep and a fixed amount due every month will help you plan your budget.

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12 Responses

  1. Ironically, my wife in her college class just did a paper titled “Credit Cards: Friend or Foe?” Good post. Problem is, people forget that their plastic is not cash. There is an interest rate attached.

  2. Jasonnoguchi says:

    Whenever anyone feels that they MUST use their credit cards, their financial pictures are already in a lousy mess. Remember, you do not want to still be paying for your christmas dinner 1 year later.

  3. jasonnogguchi says:

    Your blog is a must read for most white collars.

  4. Emily says:

    My credit card purchases are much higher than my cash purchases for one simple reason: I don’t like carrying more than $60 or $80 in cash, so when I buy a camera, or an iPod, or a computer, or a few housewares, naturally I use a credit (or debit) card.

  5. name says:

    You are a moron.

    You screwed up and went into debt, now you piss and moan like a whining infant instead of accepting the responsibility.

    Credit cards are NOT evil; they are a tool. Being “anti-credit cards” is a childish revenge tactic for your previous mistakes (debt).

  6. pepe says:

    All accounts begin at 0 (zero). You can put money onto a credit card (actual credit) before you debit money out of it, effectively using it as a debit card.

    Plus you’ll have protection (something debit cards don’t have).

  7. stop says:

    If things are getting out of control, get rid of your credit cards. Studies show that people who have no credit cards spend less. This won’t apply to me because I do own a few cards which I use for convenience, but you’ll need to assess your own situation and what you’re comfortable with.

  8. wisemom says:

    I live cheaply now. No cable, No live television, nothing beyond the Sunday paper. No movies or eating out, or take out. My place was paid for in cash from the old one.

    Credit cards smell like rat racing and I’m not running anymore.

  9. No regrets! says:

    Im with you Robin. I do not have a credit card. And most importantly, I do not have credit card debt.

    One thing I hate is …..

    Rental car companies, for example, generally reserve an extra $250 from your account on top of whatever they are going to charge you.

    I hate that. But Im willing to live with it.

  10. Intiendes says:

    Credit card is good if a person knows how to use it properly. As my boss always say. Its not good to spend a money that you dont have.

  11. Ravi Kalmady says:

    All said and done, treat a credit card with respect and it will treat you with respect.

    Lately, I use it only for emergencies and at places where you can’t pay in cash (as in online purchases, travel bookings, etc.).

    Abuse your card on impulse buying, and you’ll soon be dead meat … because impulse shopping doesn’t know where to draw the line.

  1. June 9, 2007


    I do think you right on the spot with this post, i could use a lot a struff for my new study thank you very much.
    Greets …

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