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Information on mortgages, home equity loans, and consumer credit to help you use the power of financing to your advantage.
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Credit Cards > Rebuilding Credit
Ways to avoid credit problems
Copyright Associated Press
Deborah McNaughton, president of Professional Credit Counselors in Brea, Calif., admits that she didn't understand credit cards at the beginning.
"When I got my first card, I thought I was big stuff," she recalls. "It was a department store card, and I went out and charged all sorts of things."
As she brought home all her purchases, her husband asked, "How did you pay for that?" And her answer was simply, "I didn't. I charged it."
It wasn't until the bills started arriving "that I realized I had to pay it all back, and it wasn't fun," McNaughton said.
McNaughton has learned much since then and has spent the past two decades counseling consumers on how to get out of debt and improve their credit. She has some tips on how to avoid getting into trouble:
_ Set a personal limit.
"Say you think you can pay $300 a month," she said. "Keep track of your expenditures on your cards, and once you get there, stop charging."
_ Don't collect too many cards.
"Most people don't need more than two or three," McNaughton said. Bank cards are a better choice than department store cards because they generally carry lower rates and are more widely accepted.
_ Look for the best deals.
"Move high-rate debt to low-rate cards," she said.
_ Pay more than the minimum.
If you owe money on a number of cards, rank them by the interest rate you're paying on them. Pay off the highest-rate balance first, then work your way down the list, she advises.
_ Get help.
She said families spending 15 percent of more of their take-home pay on credit card debt should consider it a red flag that they need to cut back.
"If you can only make minimum payments _ or not even that _ find a good credit counselor," she said.
Consumers can find counselors through the National Foundation for Credit Counseling, www.nfcc.org, and the Association of Independent Consumer Credit Counseling Agencies at www.aiccca.org.
McNaughton, whose books include "The Get Out of Debt Kit" and "All About Credit," operates the Web site www.yffonline.com.
Reproduced with permission of the copyright owner. Further reproduction or distribution is prohibited without permission.
People: McNaughton, Deborah
Dateline: Undated
Text Word Count 352
The tips on this website should be considered food for thought only. Lendingtips.com is a clearinghouse of ideas, not a professional adviser. Before any important decision, please consult the appropriate professionals (lawyer, accountant, real estate agency, broker etc.).
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• Credit Cards > Rebuilding Credit, Credit Card Archive
• Credit card payoff Use this calculator to see what it will take to payoff your credit card balance, and what you can change to meet your repayment goals.
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