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Credit card debt 101

Started by Deleted user
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Deleted user

Debt is overwhelming me right now every time I move forward life throws me a punch and I go back

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Shantel B.

Once I pay off my last credit card I'm done and will never use another credit card again. I will never again be a slave to the lender.

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Shaina P.

"Credit cards are for emergencies" is one of the biggest lies the financial industry has ever taught us. Savings accounts are for emergencies, credit cards are for building credit. They can also be leveraged as well as earn you money. You would not believe what I earn in cashback and bonuses every year. They are by far one of the most powerful financial tools in my arsenal. The key is NEVER using them to buy things you don't already have the cash in hand for.

I'm earning cashback on a biz and a personal credit card but have never tried for bonuses. Does this involve opening a lot of new cc accounts? I'm intrigued by this "You would not believe what I earn in cashback and bonuses every year."

I open a new credit card every 6 months or so for the bonus. Sometimes more often if the bonus offering is too good to pass up. So far this year I've banked $600 in bonuses and will bank another $300 with my newest card. New inquiries do impact a credit score but the drop is typically neutralized by the drop in utilization which adds points. I know credit score drops can be scary but for me, several hundred dollars in tax free income is worth losing a few points a few times a year.

Deleted user

@Shaina P. Thanks! One more question…. do you keep all those cards open or close accounts? I'm not knowledgeable about how that affects credit scores.

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Shaina P.

@Shaina P. Thanks! One more question…. do you keep all those cards open or close accounts? I'm not knowledgeable about how that affects credit scores.

I almost always do (can't remember the last time I closed a card) but it'll be different for everyone. Keeping cards open is VERY good for utilization. Utilization is the amount of debt divided by open credit. So the more open credit you have, the lower your utilization.

  • If you have $500 in debt with $1,000 in open credit, your utilization is at 50% - your credit score drops.
  • If you have $500 in debt with $10,000 in open credit, your utilization is at 5% - your credit score rises.

Creditors want to see utilization at or under 30%. Ideal utilization is at or under 10%. There are other factors to consider when deciding to close an account or not but if the goal is highly favorable credit, lean toward keeping it open. Utilization is very important.

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Nicole P.

I’m trying to tackle credit debt as well. I was able to do a balance transfer with no interest which make it easier to pay it down

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James H.

The key to credit cards is self-control and discipline! I love using my credit cards to buy EVERYTHING I can with them (that doesn't charge me an additional fee) because I build up points and rewards. I typically pay my credit cards off every week or two to be sure I don't carry a balance, and never spend more than I can afford to pay off right away. In the end I benefit with $100's in rewards each year for spending what I would anyways. :)

I came to say the same! Downloading banking apps has been helpful for me to see my balance regularly and make payments throughout the month.

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Elizabeth F.

Thank you for the information. I downloaded my bank account

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Lisa P.

Credit cards have their place in life. They do have advantages and disadvantages. If you struggle with budgeting, steer clear from them.

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Mark S.

My credit card debt it stayed way up there for a couple years and I got came to some money and I paid one all the way off and the other one halfway off so I'm getting better at it just if you have extra money put it towards it

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James N.

And it's hard to keep up with my credit card debt.

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Sarah S.

I have one of those cash back cards as well. I use it to pay for gas and groceries then pay it off every month. I've made about $300 off of them every year by doing this. It works well as long as you stay within your budget and don't carry a balance.

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Donna D.

Trying to pay off debt and medical bills is really challenging.

Deleted user

Use the Debt Snowball method that Dave Ramsey recommends.

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