Christmas Credit

"The fact is, nearly 75 percent of Americans who use credit cards make only the minimum payment each month. At that rate (minimum payments) you could spend the next thirty years paying back a $3,000 credit card debt and give the financial institution $8,000 worth of interest. It's the principle of compound interest in reverse." - Raymond McHenry

I hope I'm not too late with this post!

To all of those millions of people that use and live by credit cards, it is abundantly clear that we are prey to our own human nature. Credit card companies understand and exploit the mere fact that we are human.

Once you are approved for a credit card, which is quite easy to accomplish these days, they are betting on the fact that you will use that card. These companies are even more sure that you will not pay off your credit card each month.

This is where they make their money...interest charges.

It is those interest charges which begin to create a circle of debt that can make it nearly impossible to ever pay off a credit card. It is this constant debt upon which the companies make their money.

Now comes the rub, late fees.

Most late fees average around $34, instant profit to the credit card company and an addition to your balance collecting interest charges if you don't include that amount in your next payment. The pile of rocks (your debt) grows even higher.

How do you overcome the pitfalls of credit card usage?

Kristyn Kusek Lewis suggests these following tips.

* Remember a due date on your card statement is just that. A postmark date is not the same thing. Many card issuers impose ultra-specific cutoff times (American Express, in example, won't process some payments received after 12 noon in a customer's time zone until the following day), try to make your payment, by mail or online well in advance.

* One way to avoid going over your limit (and facing extra fees as a result): Go to the card company's website. Most will alert you via e-mail when you creep close to your cap.

* If you've historically been a good customer, it can't hurt to ask the customer service department to waive over-limit or other fees.

* Also, if your interest rate goes up, it's worth asking to have it lowered. A study by the Massachusetts Public Interest Research Group found when cardholders requested a reduction, about 6 in 10 had their rate reduced at least a third with just one five-minute call.

What I caution everyone is to use credit cards with care.

Do not overuse them and keep them to a minimum balance. Cash is always better but use of credit can be useful. One good way to limit the need for credit card purchases is to pay yourself at each paycheck (10%) and build up your savings. This will cut down the need to use a credit card.

Lastly, read as much as you can about using credit and creating a savings account. Knowledge is power in many instances and the more you know, the better prepared you will be to handle your finances.

Again, I hope I'm not too late with this post!

Stay inspired my friends!