Many people in New Jersey forget the impact that certain actions regarding credit cards can have on their credit and their wallets. But worse than that, there are certain action regarding credit cards that can be warning signs that a consumer is in trouble financially and possibly close to bankruptcy. Two of those warning signs are spending up to a card’s credit limit and taking out cash advances.
Nearly 30 percent of a consumer’s credit score is based on the amount of credit a person has available. When credit cards are maxed out, a consumer’s credit score can suffer. In addition, having credit cards that are at their limit may be a warning sign to a consumer that there could be financial problems.
Another indicator of possible financial issues could be taking out cash advances on a credit card. Taking out a cash advance on a credit card is not the same as using the card for purchases. There is often a higher interest rate on funds that were taken out as a cash advance. Consumers may want to consider using cash advances only before payday loans or to pay for overdraft charges.
New Jersey consumers can use credit cards to better their credit score, but when they are used just to get by from month to month there could be problems. Consumers that find themselves maxing out their credit cards and taking out cash advances may benefit from filing for bankruptcy protection. Even though a bankruptcy will have an impact on a consumer’s credit score, once the bankruptcy is complete, a consumer can begin to repair the damage.
Source: Today, 10 costly credit card mistakes, No author, Aug. 20, 2013