Recently because of the economic downturn money gurus and financial advisors have been changing their tune about how to handle credit card debt and how to handle credit card accounts.
Top money advisors like Suze Orman and others have changed their long standing advice in a few ways.
One of the key changes has been a complete turnaround in thinking about credit cards.
We know we have been told for years to pay down our credit card debt. And not only to pay it down but to pay it off as soon and as fast as possible.
And I'm sure many people are still trying to do this, except those who have found themselves jobless at least for the time being or for a longer period or have heard about this new advice.
What they're telling us now is to make only the minimum amount of payment on our credit cards. They tell us that the debt we accrued with these cards is unsecured debt. That means the credit card companies can't go after our house, cars or any other real or personal property we own.
Because the debt is unsecured they hope we WILL pay the cards off eventually so they can abruptly close our account. They now have nothing to lose and this is how they are going to protect themselves in this market. So even if you have means to pay down your credit card accounts we are now being advised not to do it. We need those accounts for emergencies as much as we hate them and to protect our long standing credit history.
The other key piece of advice is to make only the minimum payment on our credit cards and conserve our cash. We may need the cash in the future and not be able to tap any other sources for it including our credit cards. Especially in view of the fact that credit limits have been decreased and interest rates have been raised.
So with this new advice take a look at your current budget and financial planning and make adjustments as necessary. The advice is good I think and especially at a time when we need to stash away emergency funds and keep our credit cards for emergencies – all in all protecting our credit reports, FICO scores and history.
There is always more you can do to protect your credit card accounts and protect your credit history. Make sure you have your most current free credit report to make sure you know exactly where you stand. You can get it free online from the only government source that is truly free.