Do you dread each month when you are looking at your credit card bill? You are like many Americans who are overwhelmed with credit card debt. However, it is vitally important to your finances to get this under control as quickly as possible. I am going to list some reasons why it is important to pay your bill in full each month. If you are unable to pay the bill in full, you need to consider creating a strict budget and sticking to it, as well as consider obtaining a lower interest rate loan to pay your balances off, or even consider applying for a new card that allows interest free transfers for a certain period which will allow you to quickly pay the debt off.
Reason #1. Your credit rating. If you are only paying the minimum payment each month, you are setting yourself up for problems here. It is very important to keep your credit rating as high as possible so that your credit card balance does not provide a problem when you are looking to purchase a home or car. You want to make sure payments are paid off as quickly as possible.
Reason #2. Interest. Each month the balance is not paid in full, you are incurring interest charges. I liken this to going outside, making a nice little bonfire, and placing the money in your wallet in the fire one bill at a time. You are doing no better by carrying the balances on your bill. Interest rates are quite common to be around the 15%-20% range sometimes higher depending upon your credit score. This is a lot of wasted money each year that could be spent on things your family wants or needs.
Reason #3. This is similar to Reason #2. If you make a great purchase online for a wonderful item at a killer, price and you pay with your credit card you are not saving any money! If you save a couple of hundred bucks on the price of the item, but pay several hundred dollars in interest fees you are not saving any money, and are in fact paying more! Credit cards can hurt you in this respect.
Reason #4. Budgeting. If you are using your credit cards to pay your bills without paying off the balance every month then you have a budget problem somewhere. If you cannot afford to pay the balance each month then you need some serious budget revisions. When you are having to use credit cards to merely make ends meet there are huge budget problems that can create devastating effects on your credit report. There are several consumer-financing companies that can assist you in reducing your monthly bills, as well as getting a workable budget set up so that you are able to pay your bills each month.
As you can see, credit cards can be either good or bad for your budget, finances, and credit file. You want your credit to be as spotless as possible, and dragging balances over months is never a good idea. Good luck with all your credit cards and you should be able to work out all budget issues quickly with some work.