Black & LoBello

No mat­ter how many credit cards you own, never keep a balance on any of them to avoid any and all finance charges.  However, many people do not have the discipline to pay off their credit cards every month and fall into credit card debt.  Who knew that such a little piece of plastic could cause so much havoc on a person’s finances?  How do people justify putting themselves in such a situation?

Here is a short list of common excuses for unplanned charges on credit cards:

The 0% introductory interest rate is a bargain you just can’t turn down.

Your dream TV is on sale at your local electronics store. You think you must be in the right place at the right time.  As you begin to think about whether you can buy the TV and whether it was in your budget, a sales person approaches you with the kicker: 0% interest for 12 months.  But you really have to think, do you really need this item now? Are you really saving enough to justify this spontaneous purchase? With a 0% interest rate, the payment will only be a small amount, making the TV seem much more affordable.  In the beginning, you think you will pay off the balance, but in reality, you get sucked into buying even more.  After 12 months, you find yourself stuck with massive finance charges.

The same goes for 0% balance transfers between credit cards. Maybe some people can avoid paying any interest by transferring credit debt from card to card, but if you forget for any period of time, you get stuck with more high interest debt. Avoid the 0% interest trap!

The rewards from credit card purchases are worth it.

Try to use credit cards that offer bonus points or cash back from certain purchases such as gas and groceries. However, remember there is a reason why credit companies offer reward programs.  People usually don’t pay off the entire balance and instead, rack up significant interest charges.  They want your business AND your interest.

It’s for an emergency!

You may have an emergency fund for purchases like home repair.  However, you decide to charge it instead of tapping into that emergency fund.  You think you want to keep your emergency fund intact and cheat just once by charging the expense.  However, nothing ever happens just once.  Use the emergency fund for what it’s for: emergencies.  Otherwise, everything might start to seem like an “emergency.”

We’ve been good so it’s time to treat ourselves.

It’s been a hard month you are tired of staying home on the weekends.  You feel like you simply MUST go to California for the weekend and enjoy the beaches.  Maybe you have your eye on the latest smart phone. You work hard for your money and now it’s time to buy something for yourself. By charging it, you avoid most of the guilt since you don’t see the funds quickly disappear from the bank account. However, just because you think you deserve it doesn’t mean you are immune to finance charges on your credit card.  That $2,500 trip to California will end up costing you $4,000+.  Budget for your vacations and treats.

I’ll start paying off my debt next month.

Why waste your fun money by starting to pay off your debt? The debt can wait.  But, while the debt waits, the interest charges accumulate.  Every so often you can justify a purchase by committing to make changes to your budget so that you will have the additional funds to pay down that debt.  However, months go by and you never ACTUALLY change your budget.  You need to have the attitude to start NOW or you may fall victim to the continuous cycle of credit card debt. It’s time to follow through on the promise you made to yourself to achieve your goals of being debt-free.

I’m going to get a raise soon.

Be grateful just to have a job.  In today’s economy, bonuses and raises are a thing of the past.  Plus, even if you do get that raise, you want to enjoy it THEN and not have to pay off credit card debt from months ago.  You work hard and you deserve to splurge when your raise or bonus comes but WAIT to get it.

This is the last time.

You have a plan of not using your credit cards until you pay off the balance. But wait! Before that, you just need to make one more purchase.  One more purchase won’t hurt, right?  You just avoided following through with your plan of paying off your debt. Next time is always the last time until you cut up your cards for good until your debt is gone.

The payments are small.

You see the signs everywhere: Own this TV or computer for only $40 month! What the sign won’t tell you is that you could end up paying 25% for the TV because of all the finance charges you accumulate by paying the minimum each month. If you can’t afford it now, you shouldn’t consider any store gimmicks.

It’s only for a small purchase.

Every time you don’t have enough cash, you are forced to use your card. Those small charges add up. If you already had a balance on your card, your fight to become debt free becomes that much more difficult. You don’t want that $6 lunch to turn into a $7 lunch month after month. Try and use cash for small purchases as much as possible, especially if there is no gain in making the credit card purchase.

In the end, credit card debt is only bad for your financial health.  While the rewards are enticing the risk is too great.  What excuses have you used in order for us to fool ourselves into using that credit card?  Please share!

Randy M. Creighton, Esq.