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The credit card carnival — enjoy the ride!

Summary

Poorly managed credit can seem like spending eternity at the carnival — complete with thrill rides and junk food — if you don’t know how to take control.

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If you’re like many Americans, your credit situation is sort of like a day at the amusement park — lots of ups and downs, thrills and chills, and the tendency to overindulge and engage in risky behavior.

While there’s nothing wrong with enjoying the rides, it’s important to keep your hands and feet safely inside and buckle up for safety. It’s the same deal with using credit cards, as the following guidelines will explain …

 

The roller coaster
Many of us have experienced the thrill of finally paying off a high credit card balance. But the thrill can turn to dread when you neglect to pay off future balances in full afterward, only to find your card debt slowly climbing back up to where it was before you paid it off. Welcome to the debt roller coaster.

Stay on track:  If you don’t have the money to buy something with cash, take a moment to think before you spend on credit, says Kathleen Burns Kingsbury, wealth psychology expert and founder of Massachusetts-based KBK Wealth Connection. Try this: “Leave the store. If you still have a burning desire to have the item the next day, then consider going back. Spending less will ultimately make the ups and downs of credit card debt easier to stomach.”

Another way to survive that debt corkscrew (without losing your lunch) is to avoid trends, says Greg Meyer, community relations manager for Meriwest Credit Union of San Jose, Calif. “Buying things sometimes gives you a high. Take a look in your closets and think about all of the things that you bought that are now sitting there because it went out of style too quickly or is uncomfortable,” he says. Learn from past spending sprees, and be sure to keep your seatbelt (and wallet) fastened.

The carousel
An amusement park classic, the carousel is easy and comfortable, taking you round and round. Of course, you never get anywhere. The same goes for anyone who’s been making only minimum payments on a large revolving credit card balance. 

Stop the cycle: With new rules in place that show consumers on every billing statement just how long it will take to pay down a balance using only minimum payments, the reality can be startling. “You can’t stay in denial about what that number looks like when it’s staring at you on your bill,” says Kingsbury.

“Making larger payments gets you off that carousel, starts paying down your debt and reduces the amount of interest you pay monthly to the ‘Strong Man’ at the carnival, otherwise known as the credit card companies and banks,” says Meyer.

The freak show
Forget the bearded lady and rubber man … If you want to get really freaked out, try ignoring the conditions of a no-interest offer!

Don’t get duped: On the surface it sounds like a great deal, says Meyer. “You buy a TV and pay zero percent interest for one-year financing. Or perhaps it’s a house full of furniture for zero percent for 36 months,” he explains. But beware … If you miss a payment or leave a balance at the end of the term, that no-interest loan will morph into a freakish 24-plus percent debt monster, he says. “Interest payments will be backdated to the beginning of the loan.”.

The teacups
Surprised at how dizzy a spin on the teacups with the kids made you because they kept turning that center wheel? Likewise, if you feel like your debt is spinning out of control, take charge of the ride, even if that means getting some help. 

Enter the no-spin zone: As an exercise, go down your credit statement and label each purchase as a want or a need, suggests Kingsbury. “Look at your patterns, and start to make some changes. If you’re still not able to stop overusing that card, it may be time to reach out for help,” she says.

While an nonprofit credit counselor or adviser can help you address your spending habits from a financial standpoint, Kingsbury urges that you look at your spending from an emotional perspective as well. Understanding what’s really motivating your purchasing decisions is the best way to bring your dizzying ride to a stop. 

The concession stand
As a kid (and admit it, as an adult, too!), you knew too much carnival snack stand food would make you sick, but you ate as much it (think cotton candy, kettle corn and corndogs) as you could. The same can be said about overextending your credit.

Portion control: “It is important to tap into the adult within when it comes to using credit cards,” says Kingsbury, “as opposed to the inner kid that runs up credit card bills and ends up feeling sick when the statements come in.” Rule of thumb: It’s better to use your credit card to help you buy one good purchase than to buy many small ones that leave you feeling like an over-sugared kid with a tummy ache. “When we don’t manage the financial and emotional aspects of credit, that’s when it becomes a problem.”

See related:Money and credit lessons learned from TV, 13 greatest credit card songs meld pop, plastic, New card statements elicit fear, spur action

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The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

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Credit Card Rate Report Updated: March 25th, 2020
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14.34%
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16.55%
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