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Tennessee residents can avoid costly credit card mistakes

A recent Gallup poll survey reported that Americans, including Tennessee residents, average 3.7 credit cards to their name. The average person's understanding of credit cards, however, is sometimes poor, making him or her vulnerable to mistakes that could make for substantial credit card debt.

Many people with an incomplete understanding of debt believe making minimum payments is the easiest way to handle monthly credit card bills. Doing so, however, not only means that debt is not paid off quickly but it also grows because of interest on the unpaid balance. Rolling over this balance month to month does nothing to pay down the accumulating interest on the principal.

Another problem is maxing out the credit limit on a card. A credit card should only be considered a last resort when it comes to expenses. It can be held for emergency use when something unexpected happens such as medical bills or car repairs. It should never be used to pay daily, weekly or monthly expenses unless the bill is paid off in full each month. Otherwise, the credit card holder will accumulate more debt from the added interest as well as finance charges. Another mistake many consumers make is not reviewing their monthly credit card statements. A monthly statement contains every transaction made using the credit card. Without checking the statement, a cardholder may never know about unauthorized fraudulent purchases or fees or charges made by a credit card company that are not necessarily justifiable.

It is not uncommon for people to make mistakes when it comes to finances and credit cards. When they do, they should know legal options are available that can help them eliminate their debt. Options such as bankruptcy, debt relief and debt consolidation not only can free a cardholder from financial challenges but also allow a fresh financial start.

Source: Business Journal, "5 Credit Card Mistakes that will cost you," Julie Myhre, May 19, 2014

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Kenneth C. Rannick, P.C.
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