Americans Wise-up on Credit Card Use

by Greg Lipinski

I find myself to be a very lucky person; my parents have taught me the basics of credit cards, building credit, and how I should use a card at a young age. I’ve only been using credit cards for the last four years, in an attempt to build my credit score. My rule: purchase items that can be paid off in a maximum of four months. I’m relieved to have been taught to be frugal in the use of credit cards, and it seems as though the whole nation is adopting a similar approach.

I’m not making the assumption that everyone is looking to completely pay off balances within four months; however, many people are being much stricter with their credit spending and the plans that they create to pay off their balances. It couldn’t have come at a better time.

The recession has caused many card companies to cut credit limits without warning, posing a serious threat to your credit score. Holding a large balance only makes the threat graver. However, despite the average credit balance rising, the percentage of consumers falling behind on payments is much less. This is a result of stricter budgeting, and actually sticking to that budget.

That’s the best method of using credit in this market: create a plan and stick to it.

Luckily for everyone, the burden of credit will be alleviated…at least a bit. Washington is moving headstrong on passing reforms that would restrict fees and charges, increase disclosure, and protect younger consumers.

In the end, however, you have to monitor yourself. Only He-Man has the power to storm Castle Grayskull, but you, like Prince Adam, have the power to control your credit.

Sources:
http://wbztv.com/business/credit.card.debt.2.954722.html

http://www.foxbusiness.com/story/markets/industries/retail/strict-credit-card-rules-forward-washington/

http://www.newsadvance.com/lna/business/local/article/some_card_companies_cutting_credit_limits/8287