6 tips for managing a credit card wisely

Credit cards can be a useful tool for people in Ohio, but only if they can be used wisely.

The average home in Ohio and across the country that carries any kind of credit card debt owes $15,762, according to a report from Nerd Wallet. Unlike debt like a mortgage or car loan, credit card debt can be detrimental to someone's credit score.

Keeping that in mind, it is imperative that people know how to manage having a credit card. Here are six tips to using those accounts wisely:

1. Know your credit score

Before opening a credit card or taking on any other loan, for that matter, it is imperative that consumers know what their credit score is. As the Federal Trade Commission points out, people may gain access to their credit score for free once every year. There are also sites that permit consumers to pay for a score, and there are even credit cards that grant free access to that information.

The reason this is so important is that interest rates are often based on the cardholder's credit score. People with lower scores may want to opt for a card that is designed to help build credit.

2. Set your own due date

Many credit card companies will permit a cardholder to set the due date he or she wishes. This can be advantageous, as it may work to set the date apart from the date that rent or mortgage is due. Or, some people find they prefer to have a due date close to payday every month.

3. Manage the balance wisely

One factor that determines someone's credit score is whether or not a card has been maxed out. Experts suggest keeping the balance on a card between 20 and 30 percent of the actual limit. Even if the balance can be paid off in full, maxing out a card every month can be detrimental.

4. Never carry a balance

The only time interest is charged on an account is when someone cannot pay off the balance in full and on time. Interest rates can be shockingly high, adding a significant amount of money to the next month's bill. Consumers should adjust their budget to ensure they can bring the credit card balance to zero every month. Failing to do so could result in revolving, overwhelming debt that creates severe financial turmoil.

5. Communicate with the card company

It is entirely possible to make a mistake and miss a payment. If someone has a good history with the card company, it is possible to get late fees waived. According to a poll from CreditCards.com, 89 percent of people who were charged a late fee but asked for reprieve were granted it.

6. Know what to do about debt

There are countless people across the country who have credit card debt. It is possible to find a card with an appealing balance transfer option. This enables a consumer to move debt from one card with a high interest rate to another card at a better rate, possibly even a 0 percent rate for a certain period of time.

People with serious credit card and other debt may also want to explore the option of filing for bankruptcy. Anyone who has questions regarding that issue should speak with an attorney.

Frequently Asked Questions

  • I hear bankruptcy is a lot harder to file now. What is the difference?
    • Since Congress passed the new bankruptcy law in 2005, it is necessary to take two bankruptcy counseling courses. The first bankruptcy counseling course must be taken before you can file your bankruptcy petition, and the second bankruptcy counseling course must be taken before the court will issue the discharge order relieving you from your debt. Both bankruptcy counseling courses can be taken on-line for a small fee, and can be done in a few hours.

      There are also stricter requirements on who can get a total discharge of debts under a Chapter 7 bankruptcy. You must earn under a certain annual income for your area of residence, or you must be able to pass a means test provided for by the bankruptcy law. Under this means test, your income is matched against a formula for average monthly expenses in your area of residence to determine your monthly disposable income. Your debts are compared with your monthly disposable income to determine if you can afford to pay your debts. If you do not pass the means test, you may still get bankruptcy protection through a Chapter 13 bankruptcy where you pay some or all of your debts through a payment plan. While these restrictions limit some people, the bankruptcy attorneys at Bailey & Gunderson have found that the vast majority of people who need the protection of a bankruptcy are still able to take advantage of it.

  • Can I get all debts discharged through Bankruptcy?
    • Under Chapter 7 bankruptcy, you may get a total discharge of your debt. However, some of your debts may not be dischargeable. For instance, income taxes may not be discharged except where the debt is at least three years old, and you filed your income tax return timely. Student loans and child & spousal support obligations are also not dischargeable. Debts incurred through fraud are, likewise, not dischargeable. You may, however, apply to pay these debts through a Chapter 13 payment plan. The bankruptcy attorneys at Bailey & Gunderson can show you how.

  • What happens in a Chapter 13 bankruptcy plan?
    • In a Chapter 13 Bankruptcy plan, you typically pay your debts over a 3 to 5 year period. Each month, you make a payment amount (usually through a wage deduction order from your paycheck) which is then distributed by the bankruptcy trustee to your creditors. Secured debts, such an automobile loan, shall be paid through your Chapter 13 bankruptcy plan. Your non-secured debts will be paid from 1% to 100% of the total amount of your non-secured debt, and will be paid interest-free. The percentage of your non-secured debt that you must pay will initially be determined by the bankruptcy attorneys at Bailey & Gunderson. Once you have completed your Chapter 13 Bankruptcy plan, any remaining debts not paid through your Chapter 13 bankruptcy plan shall be discharged.

  • Will I lose my house, car or retirement savings by filing Bankruptcy?
    • The bankruptcy attorneys at Bailey & Gunderson will work with you to minimize the assets (if any) you may have to surrender when you file for bankruptcy. You are entitled to keep a certain amount of assets, which are "exempt", from seizure by creditors or the bankruptcy trustee. If the Chapter 7 bankruptcy exemptions do not provide enough protection, the bankruptcy attorneys at Bailey & Gunderson can develop a Chapter 13 bankruptcy plan that will preserve your assets.

      Working without an attorney, or with inexperienced counsel, may result in unpleasant surprises for you, as you may have to forfeit assets that you could have saved with better planning. The bankruptcy attorneys at Bailey & Gunderson can show you how.

      The attorneys at Bailey & Gunderson have filed over 1,000 bankruptcy cases. We offer a free initial consultation, and reasonable payment plans for our bankruptcy clients.

      Since 1995, the law firm of Bailey & Gunderson has assisted bankruptcy clients in the greater Cincinnati area (Hamilton, Clermont, Butler, Warren, and Brown Counties). If you have questions or need information about bankruptcy, please call our Cincinnati office at 866-540-8424, or email us.

  • Why Choose a Dissolution of Marriage?
    • A dissolution of marriage offers many advantages over a traditional divorce. The first consideration for many couples is that a dissolution of marriage is a much faster process than a contested divorce. Once your petition for dissolution of marriage has been filed, a hearing before a judge or magistrate shall occur within 30 to 45 days. A dissolution of marriage is usually much less expensive - both in terms of attorney fees and costs, as well as emotionally, because the spouses resolve the issues between them by agreement.

      It is a common misunderstanding that in a dissolution of marriage, the couple hires one attorney who works with them to resolve the issues and generate a separation agreement. In fact, an Ohio attorney can only represent one of the spouses. The family law attorneys at Bailey & Gunderson help to identify all of the issues which need to be addressed in your unique situation. Our firm will work with you to identify all of the assets and debts associated with the marriage, and to determine the most equitable and fair distribution of those assets and debts between the spouses. We also are committed to serving the best interests of your children. Some parents choose to have a shared parenting plan, which allocates the parental rights and responsibilities between the parents, including parenting time, child support, decision making, and payment of health insurance & expenses.

  • What Factors Does a Child Support Calculation Take Into Account?
    • Ohio child support law uses a formula to calculate child support. The law and the formula it establishes look at a number of factors in determining child support. These factors include:

      * The number of children involved

      * The gross annual income of both parents

      * The monthly child support obligations of either parent for other children

      * Existing spousal support obligations from previous marriages

      * Monthly day care, education and health care expenses

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