How To Spot Red Flags Of Financial Danger

Many people get stuck in bad debt because they choose to ignore the signs of the problem

. Indeed, there are always warning signs that point to the imminent disaster - bankruptcy. What are the major red flags of financial danger and how can you spot them? Here are some tips:

Using your credit cards for everyday purchases. Do you find yourself charging even the smallest purchases to your credit card? Do you often use your card to pay for unexpected buys? Do you need to use your credit card to buy or pay for necessities such as food, electricity, gas, etc? If yes, then obviously something is not right with your budgeting and you could be in danger of credit card debt build-up.

Making only the minimum payment. Do you tend to pay only the minimum required due payment of your credit card each month and choose to leave the rest of your balance? If you do, you are adding more load to your obligations. Remember that carrying a balance also means incurring interest rate charges which can range from 15% to as much as 20% of the original amount of your debt.

Not paying on time. Do you frequently miss your due date? If you often wait for the next bill or the disconnection warning before making payment, then obviously, you are putting yourself at a greater risk of uncontrolled debt. Falling behind on your payments would make it more difficult for you to catch up with your obligations, not to mention the additional late fees that you will incur.

You often get into arguments because of money matters. If the issue of repayment or budgeting gets in the way of your personal relationship, then you ought to step back and realize that there is a problem with how you manage your finances. It's never too late to find a solution to the problem. And with cooperation from your family members, it shouldn't be so hard to regain control over the situation.

You are not aware of the status of your debt. Do you know exactly how much you owe each of your creditors? Do you even bother to check if your billing statements are correct or if there are unauthorized charges in your account? If you are not even sure about your real debt situation, then surely you haven't been paying much attention to your monthly bills. Such habit can lead you to bad debt, sooner or later.

Borrowing cash from your credit card. Do you use your credit card to withdraw cash from the ATM, thinking that you can always pay it back later? Big Mistake! Credit card issuers usually charge a higher interest rate on cash advance transactions than the regular APR. Plus, there is no grace period so the interest rate is automatically added to your bill the moment you take the cash.

Maximizing your credit limit. Do you usually use your credit cards until you reach your allowable credit or do you even exceed your limit, sometimes? If you do, you could be spending more than what you can afford.

You get calls and notices from your creditors. If you are starting to receive calls and notices from your creditors, reminding you about your past due payments, you may already be in trouble. If you don't act soon, you could find yourself with not much option but to file for bankruptcy. Don't wait. Examine your situation right now, make changes and work towards a solution.

by: Liz Roberts

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