Question for the Money Doctors
Question submitted on Aug 1, 2013.
QuestionI have 1 credit card with a balance of 1500.00, car payment, car ins, & cell. Should I pay this credit card off ?
You have monthly obligations in terms of the car payments, car insurance, and cell phone bill. It is important for you to keep up with these monthly obligations. It would be very bad for your credit score if you did not make the payments or did not fulfill the obligations. Accordingly it is important for you to pay your monthly obligations in full. These companies will charge hefty fees if you do not pay them timely or worse, your service can be discontinued. When you have bad credit it may be difficult to get these services again or it may cost you more.
Credit cards require you to at least make the minimum payment on a timely basis. This amount is shown on the first page of your statement. However, please note the minimum payment makes a very small dent into your overall balance. The credit card statements now also let you know how long it would take to pay off the balance if you only made minimum payments. If you have the cashflow, you should pay off your credit card balance on a monthly basis. The interest rates and fees can be high. You will hurt your credit score if you are late or do no make the minimum payments.
Please do not think of credit cards as a source of financing. It is too expensive. Think of it as a convenience so you do not have to carry so much cash, but you should keep track of how much you are charging on your card. You should get the receipts from the merchants. Put them in a box or folder at home. Please review your credit card statements carefully to make sure all the charges are legitimate.
If you need help managing your credit or figuring out your cashflow, you can contact your local nonprofit Consumer Credit Counseling service.&nbsp You can also get help through your local United Way.
For additional information visit http://www.360financialliteracy.org/