Accumulating credit card debt is fun, but paying off credit card debt is not fun.  If we accumulate a lot of credit card debt and carry a balance on our credit cards it can be very costly.  There are several pros and cons to having credit cards.  We need to effectively manage our credit cards for our financial benefit, and not allow them to create a financial mess. 

Our first credit card can set the tone for our financial future. If we effectively manage our credit card debt we can build a good credit history.  However, if we are financially irresponsible with our credit card debt it can definitely harm our financial future.  Good credit card management is very basic, we need to choose the best credit card for our needs and make sure to always make at least the minimum monthly payment on time.  Everything else is just makes sure that we are getting the most out of our credit card.

If you are unsure of what type of credit card will be best for your needs, I suggest that you use a credit card calculator.  After answering a few simple questions about your personal situation, the intended use of the credit card, and our willingness to pay annual fees, a credit card calculator will suggest the best credit card for our needs. 

Most financial institutions offer a credit card calculator.  Here are some credit card calculators from Bank of America and Chase.  Other Financial Institutions such as USAA and TD Bank allow us to view and compare all credit cards on the same page.  This allows us to see the features and benefits of all credit cards at the same time.

The key to credit card management is to make sure that we use our credit cards effectively so that we benefit the most from our credit card features.  I personally don’t like to have an annual fee on my credit cards, and in exchange I accept to earn 1 rewards point for every $2 spent, instead of 1 point for every $1 spent with the credit card with an annual fee.  I also don’t want to pay an extra annual fee to have a lower interest rate, but that’s just me.  Make sure to inquire on all insurance features and extended warranty benefits. 

Paying off our credit card debt is a crucial part of effective credit card management.  I personally like to have a Pre Authorized Debt set up to pay off my credit card balance in full every month with an automatic transfer from my checking account to my credit card.  Paying off the full balance of our credit card debt every month ensures that we only spend what we can afford, and we don’t overspend. It also makes sure that we don’t carry a balance on our credit card and therefore we are not charged any interest.

Every month I spend on my credit card only what I can afford to pay off. I use my credit card for everyday purchases such as groceries and personal shopping at the pharmacy.  I don’t use my credit card as a personal loan to buy items that I can’t afford. I only make big purchases on my credit card to take advantage of the added benefits such as insurance and extended warranties.

Credit card settlement can be helpful if we find ourselves in a situation where we are unable to effectively manage our credit card debt.  If we become overwhelmed with credit card debt and we are unable to make our monthly payments then credit card settlement may be the right option for us.

Credit card settlement allows us to negotiate our current debts to a lower interest rate. In some cases credit card settlement even allows creditors to forgive a portion of our credit card debt.  Credit card settlement is offered by debt management councillors who negotiate our current credit card debts and interest rates on our behalf with our creditors.  Credit card settlement allows us to make one monthly payment to the debt management councillors who will in turn pay off all of our creditors on our behalf, after taking their fee.

Having a credit card can be a big financial responsibility.  However, if we effectively manage our credit card debt it can create a happy financial future.

Tahnya Kristina

Tahnya Kristina

Tahnya is 30 years old and lives in Montreal Quebec. She graduated in 2005 from Concordia University, and she currently works for a major International Financial Institution. She recently launched You can follow her on Twitter @TahnyaP.