Credit cards are so convenient. They can be hard to live without, that is until you cringe when you open your bill.
James and Patty Walden know it doesn't take much to wind up in debt. “There are four areas that are budget busters. One is food; one is entertainment, gas, and miscellaneous items,” says James Walden.
But the Waldens got smart and they're starting this year off right. "Got on a spending plan and we started watching what we were spending. We got rid of a card, but since then, over 16 years, we've been able to manage cards," Walden says.
Curtis Arnold, founder of CardRatings.com, says it's important to know your credit score, especially in today's tough economy. “This time last year, I was saying you needed a credit score of about 700. Now I'm saying about 730,” Arnold explains.
Knowing your score can also save you money by lowering interest rates. "Once you know your score, then that really empowers you as a consumer. Then you know, 'hey, my score is 730, I should be getting a rate of say under 9 percent,'" Arnold explains.
If your score is good enough, Arnold says home equity loans can be a good way to consolidate your credit card debt. "If you've got equity in your home, mortgage rates and home equity home rates are at historic lows," Arnold says.
Experts also say, it doesn't hurt to lay off the plastic. "More and more consumers are actually realizing that 'hey, we can actually save up for something,' which has really been foreign to us as American consumers, but there's nothing wrong with saving up, not using credit,” says Arnold.
"We planned ahead on the trip to Colorado with our family and that was our Christmas and we've been saving for that for quite some time," says Patty Walden. So when the Walden's get their credit statement this month, there won’t be any surprises.
