TransUnion recently reported that the United States has made $72 million in card payments more than they did from the first quarter of 2009 through the first quarter of 2010. Other news reports keep rolling in that Americans are doing a commendable job of handling their credit card debt, while letting other expenses (i.e. mortgages) suffer.
Some people have theories as to why the average United States credit card carrying citizen has become altogether better about their debt issues.
“Many people in the financial services industry believe charge-offs have been the leading factor in declining credit card debt since the start of the recession,” said one Ezra Becker, the vice president of researching and consulting at TransUnion.
“In fact, some have stated that charge-offs account for the entire change in card balances over the past two to three years. In reality, the dynamic is more complex. Our analysis shows that consumers have made a concerted effort to pay down their credit cards during these uncertain economic times,” he added, according to The Street’s website.
This being said, some consumers out there are still suffering the woes of credit card debt. Here are some steps to remember if you find yourself lumped in this unlucky (and supposedly less-than-average) demographic.
Know Your Audience
The list varies, but when it comes to what credit card companies seek out when you go to apply for your Visa Credit Card, they take a good, long gaze at your vital personal information. It’s your household income, your payment history, your credit card balance as it relates to your credit line, your recent balance payments, the debt-to-payment balances of your debts as they exist on your credit report, how much available credit you have from all credit accounts as shown on your credit report and then the amount of recent inquiries on your credit bureau report. That’s quite a list!
Never Surpass That Spending Limit
Lots of people do it, but like lots of other things I won’t mention, that doesn’t make it right (or advisable). Sure, the thought is there: “if I surpass that cap, I get to ask for a higher limit!” Don’t think like that. Why not? Overspending shows the card issuer in question that you don’t stick to a budget and are a higher credit risk. Why would they want to take you on then?
Avoid the Minimum
Maybe it’s just a few times you went ahead and paid it, but make a habit of paying regularly and as much as you can afford. Try to double the limit and do not be late on your payments, as this will not give you a good reputation, either. When it comes to your money habits, no one wants a bad reputation.
Don’t Overask!
Every time you make a request, you get a credit inquiry as well. Every time you get a credit inquiry, you risk gravely hurting your credit report. Try to ask only once or twice a year for an expansion on your credit limit. If all else fails, simply tell the issuer that you are deeply considering other offers from other companies. Like anyone in the business sphere, they will not want to lose a customer! Call them and say, directly, that you’d like a credit limit increase. If they say no, respond with something about how you are quitting (make it count) and would like to take your credit card business elsewhere. This should have them willing to do anything you ask. When it comes to handling your credit cards, it pays to be less than nice.
These are all steps to take, though, if your credit score and history may be considered, by some, to be “less than stellar.” But if you have genuinely upstanding credit and are in a positive standing with your cards, you should be relatively safe. As for the rest of you, remember these proven strategies and of course: good luck, and happy hunting. Some day, you too can enjoy the peace of mind the American consumer majority seems to be indulging in.
Michael German is an expert in the field of personal finance and a graduate of Columbia University. His lengthy tenure includes literary work with The New York Times international weekly edition, where he contribute reports on global economy and consumer trends.