Getting on Track with Your Credit

One of the main reasons people get in too deep with their credit is that they don’t manage it effectively. Here are some of the best ways to start taking control.

1. Automate All Payments If Possible
One way to avoid late payments or missed ones is to automate them. If you are not already using online bill pay and making electronic payments to your creditors, go online now and start setting them up.

2. Go Paperless If You Can
Paperless statements are convenient and easy to store. Save them as PDFs in a Finances folder on your computer for easy reference. Create one folder per bank account or credit card to keep yourself organized, and download each statement into the correct folder. Also remember that you will need to keep all your financial records for at least seven years for tax purposes.

You can also print out a copy to keep on file, such as if you have questions about a statement and wish to follow up via their online customer service or in the mail.

3. Take the Time to Read and Review Your Most Recent Credit Card Statements
There are a several important reasons for this and several key things you should be looking for and doing as you conduct your review.
i) Make sure everything is correct. Don’t recognize a transaction? Challenge it using the online customer service, or over the phone. You have 30 days to challenge a credit card purchase and two days for a debit card purchase.

ii) Check the interest rates you are paying on each card. If you are not paying off your balance every month, chances are you are spending a lot more than you should on interest.

iii) Create a spreadsheet or chart, listing each card and the interest rate. This will be handy for paying down debt in a structured way.

iv) Review your spending. What did you buy on those cards this month, and why? A credit card can be helpful if you:
* Get cash back or something useful, like money paid into a Upromise account for your kids’ college funds
* Pay your balance off at the end of each month. If you don’t, then you will be paying interest on all your purchases, making them much more expensive than the sale price that probably tempted you in the first place

v) Look for the minimum versus paying extra scenarios on your bill.

Due to new regulations designed to cut down on predatory lending practices, your statement should have two financial scenarios presented on the front page. One will be an example of how much you can expect to pay on your existing credit card balance if you pay only the minimum on your bill. This projection is only based on what the balance is at present. It does not take into account you continuing to use the credit card.

It then shows a second projection, how long it will take to pay off the existing balance if you were to pay back more than just the minimum.
Compare the two projections. Do you raelly want to hand over that money to the credit card company? Or would you rather keep it yourself? Most of us will choose the latter. In that case, it is time to get serious about paying down your debt, and staying out of debt by not using the card/s.

4. Store All Receipts Safely for Each Tax Year
If you want to claim deductions on your taxes, you will need to have an actual paper receipt, not just your credit card statement with the purchase listed. Therefore, start storing all your receipts safely to get back all you are owed.
Use these tips to get back control of your credit, and then continue to use them in future.