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Take care of the problem before creating a new one
Someone with two high-limit maxed credit cards innocently asked me
Should I apply for another credit card since I can’t use these credit cards until I pay them off?
I told them an emphatic “NO!”
If you struggle to manage your current credit cards to the point you have maxed them out, pay off these credit cards before applying for another.
You might also consider not applying for additional credit cards until you master the ones you have.
The issue with applying for another credit card while having maxed-out cards is that your focus is scattered.
Before a new problem is created, eradicate the old ones.
In the process of paying off your maxed-out credit cards, you will feel the pain from the self-discipline and time it takes to erase the debt you created, which will help you avoid the behavior in the future.
Adding a new credit card to the menu while maintaining maxed credit cards fosters an environment for you to repeat history.
This is the same behavior as buying alcohol for a non-sober alcoholic.
After You Pay Off Your Maxed Credit Cards
Remember the lesson.
Frequently right after people pay off one debt, they create a new one.
A perfect example is a friend who bought another car when they only had $1,000 left to pay for their current car.
Did they need a new car? No, but they desired a new car and ended up adding a debt that cost them almost forty times their current debt.
Was it worth it? No.
Only Use What You Have
If you have a credit limit of $15,000, no matter how tempting it is to utilize all of it, only use an amount that you can pay in full by the end of the billing cycle.
Would I spend $500 of my own cash all at once for this, or am I feeling extra free and spicy because I’m using someone else’s money?
Forgetting how much money you have in the bank is convenient when using a plastic credit card.
Technically, you can spend however much your credit card company allows, but that’s where you fall into their trap.
Credit card purchases are essentially pain-free, and they have been engineered to feel that way, so you lead yourself into the black valley of debt.
Don’t F*ck Around With Credit Card Companies
Treat your credit cards with aggressive skepticism. It is also helpful to treat your credit card as a debit card. Don’t use more money than you have in your bank account.
Most people have four types of debt:
Car Debt
Mortgage Debt
Credit Card Debt
Student Loan Debt
Credit card debt is the absolute worst one to have; it’s also the easiest one to avoid (in addition to car debt).
The 30% Rule
If you struggle to utilize less than 30% of your credit card and pay it off before the billing cycle, you’re not ready to handle a credit card quite yet.
If you consistently get overdraft fees, you’re not ready for a credit card quite yet, either.
Take some time to get some financial habits [see below] in place, and then revisit the plastic credit cards.
Healthy Financial Habits
Buy less.
Invest more.
Spend less than you earn.
This content is for informational purposes only — not professional advice. Consult a qualified professional before making any major decisions.