Five Credit Card Don'ts

Credit cards can get out of control. It’s time to take the reigns and pull your debts back on track. Learn to handle your credit in a more efficient and manageable way with these five Credit Card Do’s:

Don't have more than two cards active

Have a Visa or MasterCard, since some merchants don't accept American Express. An American Express card may be useful if you travel a lot.

Make sure the credit cards you carry have the lowest interest rate available on the market. When possible, switch to a credit card with a lower interest rate. To comparison shop rates, go to www.cardratings.com, www.creditrate.com and www.bankrate.com.

If you have too many credit cards, pay off the extra cards, cut them up and cancel them.

Don't forget to keep an eye on the calendar

You've heard about "no interest, no payments for a year" credit offers with major purchases. Beware that, at the end of that first year, the interest rate can jump to a very high rate. Unless you are extremely disciplined and know that you will pay the credit debt off early, these deals can cost you lots—not save you lots—of money.

When they say "zero interest" for a year, find out exactly when that year ends and make sure that you have paid off the entire balance long before that date. Otherwise you may have a heart attack when you see your new, high interest rate.

Don't get into an anxiety habit

Overextending your debt creates stress and irritability. This can affect your health and your relationships. You may tell yourself that high levels of debt are "just a part of life." Nevertheless, trying to keep up a wealthy appearance for neighbors, family, and friends can eventually create a heavy stress. End the charade. Face up to your feelings of inadequacy. Explore how much you value yourself. Know that the value of each person is so much more than their paycheck or their possessions.

Here is a strategy for those of you who are very disciplined. If you have the cash on hand for the purchase, ask if you can negotiate a discount for cash. If you can’t negotiate a discount, you could take the zero interest offer and make the purchase. Then take your cash on hand and invest it in an interest bearing account. Be sure to remember to pay off the debt before the zero interest period ends.

Don't be afraid to ask for help

If you are having trouble controlling your spending, you may benefit from talking to others who have had the same problem. Debtors Anonymous www.debtorsanonymous.org uses the very successful 12-Step Program format. Refuse to use your credit card just as an alcoholic refuses to use alcohol. As those in any 12-Step Program know, you can fight your demons only "one day at a time."

Don't use your credit to pay for vices

Gambling, smoking, drinking too much, and illegal drug use are vices that can throw you into out-of-control spending and credit disaster. These personal weaknesses drain tremendous costs from you, both personally and financially.

Gambling causes financial strain, even divorce. Smoking creates health problems that result in medical expenses and a shortened lifespan. Smokers also pay higher premiums on their life insurance, health insurance, auto insurance and property insurance. Alcoholism can slowly destroy one's health, happiness, and family life. The most vicious of all personal demons, illegal drug use, is extremely expensive and potentially deadly.

We all know that these vices are bad for us. Even still, one or more of them may have a steel grip on your life and your finances. If so, do the most simple—but perhaps the most difficult—thing you will ever need to do in your life: admit that you are addicted and that you can't stop by yourself. Then you will find out the good news that you are not alone.

Help is available to reclaim your life, your health and your finances. Click onto www.nicotine-anonymous.org, www.gamblersanonymous.org, www.alcoholics-anonymous.org, www.na.org (Narcotics Anonymous) and www.ca.org (Cocaine Anonymous). Also, ask your employer or church for referrals to support groups or counselors.

Heidi Clingen is a long-time resident of Stevenson Ranch. She and Samuel K. Freshman are authors of The Smartest Way™ to Save, Why You Can’t Hang on to Money and What to Do About It. They offer only their opinion, which does not constitute professional, financial, or legal advice. To receive a copy of The Principles of Financial Independence or submit questions, email them at 2heidi@allwritey.com