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October 29, 2003

Q&A: Credit Card Use (II)

Q: Should I use a credit card to build my credit?

A: Credit cards are a big responsibility and mismanagement carries great consequence. Using credit cards to build your credit can backfire and you can quickly do more harm than good to your credit report. Building credit takes time, an abililty to demonstrate positive money management skills, and it's really wise to wait to use credit cards until you understand exactly how they work.

Q: How much debt is too much debt?

A: $2,000 in debt is a lot of debt, no matter how much money you make.

Consider this: If you borrowed $1,000 from your parents, it's tough to commit to $100/mo over 10 months. You don't want to have more debt than you can afford to repay every month.

On credit cards, it seems really easy and affordable to borrow money. They ask you to pay a small minimum monthly payment every month. For the purpose of demonstrating positive money management, you don't want to owe more than one-third of your credit limit.

For in depth information about how & why to avoid credit card debt, how to correctly use a credit card, and simple basics on how to get ahead with your money, you should GET A COPY OF THIS BOOK and memorize it.

More questions? Follow my daily webBlog for thoughts on debt today & more answers to money questions. If all else fails, email me! I'll get you an answer.

Posted by on October 29, 2003 at 11:12 PM |

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