CREDIT CARDS

Credit cards make buying things so easy. The difficult part comes when the bills start rolling in and the interest rates keep adding up.

Drowning in plastic

If you have ever looked at the list of bankruptcies published in this newspaper, you know Kansans have a problem with credit cards.

Debt is crippling households across the country, and the worst form of debt --- credit card debt --- is on the rise. The average credit card debt per household in 2001 was $9,900, up 207 percent from 1991, according to a press release from Morningstar Communications Co.

At 18 percent interest rate, the interest expense on $9,900 credit card debt would be $1,782 per year, or $148 per month. Paying off that amount of credit card debt requires discipline because the minimum payment per month just won't get you anywhere. You will have to cut monthly spending and contribute at least $50 over the minimum, and stop adding to the principal every month.

The average American has 6.5 credit cards and devotes 14 percent of his or her take-home wage to paying off personal debt.

Stowers Innovations --- a Kansas City, Mo., based publishing house and forum for self-made billionaire James E. Stowers --- sponsored National Cut-Up-Your-Credit-Card Day last Wednesday.

For 24 hours, Americans were encouraged to put away their credit cards and pay cash only. If you missed the official observance, you still can designate your own date to do the same thing. If cutting up the cards is too painful, at least put them in a drawer for a day or week or month and see how it feels.

"Most of us have more wants than we have money," Stowers said in a statement. Stowers, who was a struggling mutual fund salesman in 1952, is today one of America's wealthiest men and a philanthropist. "Unless you prioritize your wants, you can easily fall into the credit card trap and over-extend yourself using credit."

Debt problems aren't just a problem among the poor and middle class. The Oct. 9 Wall Street Journal said wealthy families are piling on debt the fastest, largely because of increased borrowing against the value of their homes.

Stowers Innovations offered several ways to take charge of your credit cards:

--- Adopt a policy of cash only. No checks, no plastic. You will find it's a lot harder to turn over good old-fashioned paper money.

--- Recognize the difference between need and want. Needs fall in the line of food, clothing, shelter and health care. Just about everything else can be left at the store on the shelves.

--- Review your credit card statement. If there are items you forgot you bought or a series of small purchases, you are an incidental spender. Leave your credit card at home.

--- Contact your creditors. Tell them you need a lower interest rate. Most will accommodate your request rather than lose you as a customer.

--- If you use coupons at the grocery store, write yourself a check for the savings and apply it to your credit card balance.

--- See if your banker will loan the amount of your credit card balance at a lower interest rate than the credit card company is charging. Use this money to eliminate your credit card debt. Make a solemn vow never to fall into that trap again.

--- Don't get caught paying late fees. The average late fee has more than tripled on credit cards to more than $35.

--- Learn to pay yourself first. Every pay day, put money in a savings account, regardless of the amount, and leave it there. As little as $2 a day adds up to more than $700 a year.

Financial freedom doesn't just happen. It takes hourly, daily and monthly effort over long periods of time. But the rewards are profound. Imagine having no debt.

Capital-Journal "[ CREDIT CARDS ]". Topeka Capital-Journal, The. . FindArticles.com. 26 Sep. 2008. http://findarticles.com/p/articles/mi_qn4179/is_20021022/ai_n11789198