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Are You in Debt? Learn When to NOT Use Your Credit Card!

There are a host of ways to use a credit card to actually improve your credit score. But there is also a host of ways you shouldn’t use your credit card. In this article, we’ll share a few.

Paying For A Huge Expense

It’s important to keep in mind that using up more than a third of your available credit can hit your credit score in a negative way. To state the obvious, it’s best to save money ahead of time for big expenses but if that’s not possible, a personal loan – one that is unsecured so that you don’t have to put up any collateral – may be the better option. You’ll also be able to get a fixed interest rate with the loan – a rate that’s usually lower than what you’d get on a credit card, which normally runs above 15%.

Consolidating Credit Card Debt

There are balance transfer cards offering introductory rates of 0% for a set time but they are generally only available to people with excellent credit. For those with average credit scores, taking out loans against retirement accounts or life insurance policies are options but come with severe consequences if you default. People with bad credit scores are perhaps better off consulting with a financial expert to develop a debt management plan or file for personal bankruptcy.

Covering Emergencies

When cars break down or a trip to the emergency room is required, resist reaching for that credit card, if possible – especially if you know you do not have the money to pay the bill in full later. The best way to go is to start RIGHT NOW building an emergency fund. If that sounds daunting, consider this: A recent study by the Urban Institute found that just $250 is often enough to cover many emergencies or can give you a bit of breathing room.

Paying Uncle Sam

If you have to pay at tax time, consider taking advantage of the IRS’s installment plan option. Doing so also takes away having to pay a fee on top of your tax bill. Keep in mind that if you opt to pay with your debit or credit card, IRS authorized vendors will charge you a not-so-convenient “convenience fee” of between 1.85% to 2.25% of the amount you owe.

Call The Oswalt Law Group for Workable Debt Relief Solutions

If you’re searching for the right solution to attack your debt, our team here at The Oswalt Law Group is skilled in offering a wide range of individual alternatives. There’s never a charge for the first consultation, so call us at (602) 225-2222.

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