Top Ten Personal Financial Mistakes – Part 4: More on Borrowing from Credit Card Companies —

How do you end up in financial distress? There are many reasons, and, when it comes to facing a potential bankruptcy, very often the biggest triggering event is a medical crisis or a divorce. But there are smaller factors that can add up to your finding yourself in a big crisis. This is the fourth in a series on what one bankruptcy attorney identifies as the “Top Ten Personal Financial Mistakes” people make. His list is useful for all of us to review and consider, and his posts link to helpful resources available on the web. Be sure to click on the link below to his post and check out the resources he provides, too.

Here’s an excerpt from the series by Eugene S. Melchionne, Connecticut Bankruptcy Attorney at

Do not pay only the minimum payments on your credit card each month. When you pay only the minimum, the credit card companies maximize the amount of interest they earn on your debt.

Credit card companies make a tremendous amount of money each month on the minimum payments. They can change the price you pay after you’ve made your purchase. See Credit Card Issuers come under fire. They want you to stay in debt and making that minimum payments each month. Despite whast they say, you can have too much debt. To calculate your debt to income ratio, check out the Wall Street Journals spreadsheet. The secret to success is to pay off your credit cards in full each month. Never charge more than you can pay in cash when the bill comes in.

Do you have to use a credit card for that purchase? How about leaving the credit card at home and using cash, or a check, or debit card? If you use a credit card, and cannot afford to pay the monthly bill in full, can you make more than the minimum payment set by the credit card company? Sure, they offer you the chance to extend out your payments — this doesn’t mean you have to take them up on it.

Earlier posts in the series: Failing to Live With Direction, Living Beyond Your Means, Borrowing Money With Credit Cards

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