It seems that in America, living on credit is the way of life. Making purchases with our plastic when we are all out of paper is all too tempting. Credit cards make living easier, but that can change in a heart beat if the cards get misused. Using the card without thought can pile on the debt way beyond what you may be able to handle. It is all too easy to get a credit card thanks to the numerous pre-approved offers that we are sent. Rewards programs mask the fee and interest rates that are hidden the fine print. These can be changed at the whim of the creditor, but it is seductive when they are willing to give you card after card.

One can protect themselves by preparing before getting a credit card. You can avoid digging yourself an inescapable financial hole by considering the unwritten rules. Talk to family and friends about how to rightly use a credit card, as they can be good examples to learn from. This is true more so if their credit is spotless. If their credit is poor, then they are still worth learning from in terms of what not to do and how to avoid the problems that they got themselves into.

Make a budget and have a place in it for the credit card. This can be a simple as a ledger sheet or spreadsheet where you list where your money is coming from and where it is going. Using this sheet as a guideline, you can figure out how much you can spend on the card, taking into account anywhere from 10 to 30% interest. Pay off the card completely every month, debt that sits there costs you money. Prioritize your bills, putting food, electricity, heat and rent well before your credit card. If you have little remaining money, try to avoid using your new card except for the dire emergency.

If you already have debt, then attack it immediately. Call creditors, explain your situation and see what they can do to help you in this situation. Some may give you time, while others will lower the minimum for payment. If you are being seen as making the effort to fix the situation, then you can establish a good relationship with your creditor. Keep them up to date on contact information and do not make it a chore for them to contact you. Be proactive in fixing your debt and contacting your debtors and informing them that you care about the situation. That way they will not feel the need to hassle you.

There are a number of routes one can go with a credit card, and it is a mistake to treat it as free money. Learn from your friends and relatives, despite their score being good or bad. Stay within what you can afford, and if you fall behind, stay in touch with your financial institutions, and you will find credit cards much easier to have and keep.

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Maintaining a household budget entails a lot more than just taking care of basic necessities and ensuring that there is money left over for the purposes of entertainment. In fact, maintaining your budget in this fashion is what is going to get people into debt. Most people earn money and then end up spending it right away, letting every dollar that comes in go out just as quickly. Individuals are beginning to consume every single penny that they earn, and many people even spend more than what they are earning, spending far beyond their means which allows them to fall into a serious hole of debt. A household budget is actually a powerful, effective tool for overcoming debt, reducing debt and staying on track financially.

Household budgets are excellent for helping to reduce debt.

Your household budget is essentially designed to be a set of instructions that you and your family can follow. This will allow you not only to maintain your current expenses, but also to reduce your debts as quickly as you possibly can. The faster that you are able to pay down and pay off all of your debts, the sooner you will be able to breathe easy, knowing that you will get to keep more of the money that you earn than ever before. More important than ever, imagine how much money you will be saving without having to worry about finance charges, late fees, interest rates and other completely unnecessary expenses every month.

The longer that your debts are able to remain in force, even if you are making payments against each of your debts, the more money you will end up paying in interest. Interest accrues against outstanding principal debts based on percentages. If you have less outstanding principal on your debts, then less interest will end up accruing. The faster that you are able to reduce all of your debts, the more quickly you will be able to stop paying all of that interest. Creating a household budget, then, will essentially allow you to create a debt reduction budget. It will allow you to make sure that you are getting your debts paid down and paid off completely much more quickly than without having such a budget in place. What this means for you, is that you will save as many as several thousand dollars simply by cutting off that accrual of interest as quickly as you possibly can.

There are many benefits to implementing a solid household budget, because it will do more for you than simply aid in reducing your debt. Implementing a household budget will also help you build up your savings, and will give you the ability to buy things that you need without using credit. Having a good household budget will also assist you with long term savings so that you can deal with unexpected expenditures no matter what happens over time.

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There are a lot of things that you need to educate your children about as they grow. Teaching them about money, and more importantly, the value of their credit score, is an important part of preparing them for their adult life. This is one of the most important lessons that we could ever pass on to our children, yet it is a lesson that is often neglected. If we teach our children about credit and money, we can help them to build responsible habits and behaviors for spending that will last them a lifetime and keep them from falling into debt before they ever have a chance to build a good credit history. Here are five tips for educating children on the importance of credit scores, credit reports and good spending habits.

1 - Start small by teaching young children about money management through their interactions with you.

Teach them by utilizing daily errand activities as small impromptu lessons about money and budgeting. Give your children pretend money, encouraging them to play store games. There are also numerous books that you can buy that are designed to teach children about money very early.

2 - Give a weekly allowance as a way to teach your children about spending responsibly and budgeting.

Pick a reasonable amount of money and give it to them in small denominations like $1 and $5 bills rather than a $20 dollar bill. Encourage your children to save a portion of their allowance every week by calculating the amount that could be saved in a month or in a year. Older children can benefit from opening a savings account which will educate them about deposits and withdrawals.

3 - Explain the difference to your children between wants and needs.

Encouraging your children to save and earn for something that they really want is a good way to teach healthy spending based on delayed gratification. Help your child keep accurate track of their money by giving them a chart and piggy bank incentives like $5 for every $20 that they save.

4 - When your child grows into a teen, you may consider giving them a prepaid credit card or access to a parent’s credit card.

This is a convenient way for you to introduce them to credit, but it might end up leading to startling monthly bills if your teenager is not careful. You should sit down with your teenager every month and show them how their spending is affecting your credit score so that they will understand how theirs would be affected.

5 - Students who have credit cards in college can find it difficult to handle their money because of the pressure that they have to spend on a limited income.

You need to teach your children early about responsible credit card use, debt and late payments and fines. Check their balances with them to help make sure that they stay on budget and take the time to go over their credit score and reports often to help them stay on track at all times even while away at college.

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The peak holiday shopping period is right around the corner. In a tough economy, any saving is a nice bonus so we compiled a list credit cards with 0% APR for 6 or 12 months on new purchases to help consumers stretch their Holiday shopping dollars. Combined with the 0% APR, the rewards and cash back features could save you hundred dollars this holiday season. Here is a short list of the cards you may find useful. Keep in mind you will need good credit (640+) for most of these offers.

Consumers with Good Credit

Student Cards

Keep in mind that credit cards should be treated as a convenience and used responsibility. As such, we suggest using these cards as a way to make cash back or other rewards on gifts from your list. If you don’t think you have the discipline to pay off the balances during the 0% APR introductory period, we strongly suggest using cash.

Here are a few more tips to help manage your credit and credit cards this holiday season.

1. Don’t Apply for Too Many Credit Cards. Too many credit inquiries are bad for your credit score. As such, do your research first and find the right card based on your credit score and your spending habits.
2. Know the Details. Some cards have great rates for purchases but poor balance transfers rates or vice versa. Virtually all cards pay the balance with the lowest APR first. That means if you have a Balance Transfer of 0% APR and a purchase rate of 15% APR, all your monthly payments go towards paying off the lower APR balance transfer first while your purchase balance keeps accruing interest at 15% APR. Don’t fall for it! Be smart.
3. Keep Credit Card Utilization Low. If you carry a balance, make sure it stays below 35% of your credit limit on any single card. Carrying a balance higher than 35% could negatively impact your credit score and possibly increase the interest rates on your existing cards.
4. Pay On Time Each Month. Most credit card companies are counting on you to be late on your payment. Don’t get caught paying late fees or giving credit card companies the right to increase your APR. Pay on time or even a couple days early!

The impact of the credit crunch is already rearing its ugly head as far as holiday shopping is concerned, because projected consumer spending online is remaining steady at $100 to $250 dollars on average. According to the eBillme Online Spending Index, a quarterly survey that is designed to examine online spending by consumers, the credit crunch is definitely expected to have a strong impact on holiday spending. Index results for the fourth quarter are showing that the credit crunch is causing many shoppers to significantly decrease how much they are using their credit cards, and is also impacting the access that consumers have to credit, resulting in a shift to cash as a necessary alternative.

Thirty one percent of all respondents had indicated that they would be more likely to purchase online if they could pay with cash and have an overall improved control over their finances. This is actually an opportunity for online merchants to optimize their checkout systems by providing additional cash alternatives. The eBillme Online Spending Index, an index that is conducted by Javelin Strategy and Research polled 1,600 different consumers in order to measure their projected online spending, as well as the factors which were influencing that projection, such as the economy, available payment options, financial control and security. This quarter, the index surveyed consumers about their holiday spending in addition to the normal survey. According to data from this fourth quarter, the credit crunch is continuing to put a serious damper on consumer use of credit and consumer access to credit.

- 34 % of consumers are closer to their credit limit than they were a year ago.

- 45 % of consumers surveyed have used their credit card less in the last three months, looking for non credit payment options instead.

- 55 % of people surveyed had indicated that their available credit decreased this holiday season in comparison to last year.

- 48 % of consumers are delaying purchases as a result of uncertainty in the economy.

This quarter’s index also found that as much as 46 percent of all consumers prefer to avoid black Friday shopping in favor of online shopping. As many as 13 percent of respondents are planning to do more of their shopping on Cyber Monday, which is the official beginning of the online holiday shopping season.

The index is based on data that was collected after being taken by an online consumer survey that was deployed in August of 2008. The sample size was 1,608 respondants. The next index by eBillme will be released in January of 2009 and will be posted on the eBillme blog website. You can also visit the eBillme blog website to view more data regarding the current index and the information polled about the credit crunch and its impact on consumer shopping during the holiday.

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