It's something a lot of us are aware of but don't always acknowledge: Our credit cards can be extremely useful in the right circumstances -- but in other cases they can get us into all kinds of trouble.
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A lot of people have one or more credit card and manage to get the best out of them without falling into debt. In fact, a lot of folks are able to make the most out of credit card rewards programs where they strictly abide by the terms of their cards. But unfortunately, it is very easy to start down that slippery slope into credit card debt without even realizing it. If you think you might be in danger of doing this, watch out for these four signs that could indicate that you are in trouble.
1. You use your cards on impulse. It's time for a confession: how many of us associate our credit cards with free money? Too many! In fact, card issuers realize this and frequently offer card promotions that entice you to sign up for that extra cash back bonus. If you make card purchases without thought or reflection on how you can afford what you're buying, then you could be in trouble. If you keep your cards in your wallet or purse and find yourself reaching out to them repeatedly without first checking in with your bank account, then this could be a bad sign. Each purchase you make deserves some pause -- determine if you can afford something before handing out the plastic.
2. You don't budget. You reject the idea of budgeting because you are scared of what you might find out about your income and outgo. It’s understandable –- if you know you might have more going out than you have coming in, it can be tough to face up to the reality of your situation. But the sooner you do this, the quicker you'll resolve your problem. Why not bite the bullet now and set up a budget?
3. You don’t open any credit card bills. We're not talking about those folks who forget about opening their bills; we're talking about those who ignore their bills on purpose. If you find yourself stashing your mail somewhere where the sun doesn't shine, know that it's not going to help your cause one bit. Sure, those high balances and the fear of being unable to meet the monthly minimum can keep you up at night, but the longer you leave your bills unattended, the worse your situation will get. The good news is that some credit card issuers now have tools to help you gain control of your bill payment schedule and activities. Case in point: there's the Chase Blueprint card payment program, which offers several helpful tools to help cardmembers with paying their credit card bills.
4. You start falling behind on payments. Late payments incur late fees and they can damage your credit rating as well. If you think you won’t be able to make the minimum payment, get in touch with your credit card company to let them know. Ask about their hardship program. Contact your issuer voluntarily to work out an affordable payment plan.
If you realize you've got credit card problems, try and tackle them as soon as possible. Allocate a few hours to sit down with your bills and bank statements and figure out where you stand. Take the phone off the hook and crunch some numbers to find the best way out of your situation.
No matter how much debt you may have, don't be discouraged. You should always take the steps to eradicate it even if you feel that it will be a slow and painful process. Remember that if you bury your head in the sand you will never get the full picture and things will continue to worsen. But making positive moves -- no matter how small they are -- can make a difference, as you get into the habit of paying down what you owe. Do yourself a favor today and set things straight.
Silicon Valley Blogger is a full time blogger and online entrepreneur who writes for The Digerati Life and The Smarter Wallet sites that cover general personal finance topics ranging from investing and saving to credit and debt management.