Credit Card Balance Payment Challenge

I just took a quiz on a http://pbs.org site to check my credit card knowledge against real facts. One of the questions was, "Nearly 144 million Americans have general-purpose credit cards. Approximately how many of them pay off their bill in full each month?"

My choices for an answer were 55, 90 and 115 million. In terms of percentages, they were asking me to guess if 38%, 63% or 80% of the credit card holders pay off their bill at the end of each month.

It was not surprising to know that only 38% of credit card holders pay off their bill and the rest are "revolvers." These are folks who routinely carry high balance and create a lucrative business for credit card companies.

Why doesn't everyone do this?

Simplified answers are lack of resources, lack of knowledge and poor planning. I give you one example each and hope that you visit my blog at http://mypersonalfinance.com/blog and share your input.

Lack of resources

The economy may or may not be getting better but many still feel the crunch of hard times including corporate downsizing. For those caught in the middle of a lay off, paying mortgage or rent takes higher priority than paying off the credit card balance. They also use their credit cards to take care of monthly shortage that increases the balance and makes it more difficult to pay off their entire credit card bill.

Lack of knowledge

It seems to be one of our characteristic not to look at problems for too long trying to find a solution and if too many problems pile up, we tend to prioritize things and only deal with what we can. Many who have high credit card balance have other things on their mind and automatically assume that they have to live with their credit card forever. The fact is with the intense competition for your credit card business, many credit card issuers offer lucrative incentive for you to credit card balance transfer and if you call your credit card company, you may even be able to negotiate a lower term.

This knowledge is not a solution that may help you pay off your entire balance right away, but it may help you manage it better so that the day you can pay it off comes sooner.

Poor planning

Self-discipline, over optimism and stress impact our abilities to deal with situations. That new gadget, those wonder deals on ebay that seem to call to your credit card test your self-discipline. Spending the next pay raise before it is in your hand shows a healthy dose of optimism that may back fire. And let's not forget the stress. We do strange things under stress, a visit to a local mall, a well deserved massage to soothe the nerves or going out to dinner one more time are some of the ways we increase our credit card balance.

Most of these situations can be resolved with a little planning. For example, have a list of items you want to buy and their price tag. Wait for the next pay raise to show up, go over your list and buy what is on your list.

Put new gadgets and deals on your list and let it sit for a while. Allow yourself a little cool off period before you buy anything. You may be surprised as how many things you don't have to have and how many things you can buy for much less a little later.

Understand the stress is a part of life and plan ways to cope with them. A walk in the park is healthier for you and costs less than a walk in the mall.

May you find the ability to pay off all your debts.

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