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Credit cards can help build credit when used wisely

Credit cards provide Louisiana residents with a straightforward and convenient way to borrow, but interest charges and fees can mount quickly if revolving balances are not paid in a timely manner. Using them wisely can also help to build credit, and the rewards programs that many lenders have in place give consumers more reasons to charge their purchases.

Some credit card companies reward spending with points that can be used to redeem merchandise, but the most popular loyalty programs offer cash back or discounted airline tickets. However, financial experts warn consumers not to let these perks lure them into the credit card debt trap. The consumer credit reporting agencies also encourage credit card use as credit scores fall when unused cards are cancelled by their issuers. This is because the total amount of available credit is reduced and records of on time payments are lost.

Credit cards can become very expensive when they are used to purchase necessities like food and only minimum payments are made each month. Financial planners advise holders to budget carefully and use no more than 30 percent of their available credit. They also recommend keeping accounts that do not charge an annual fee open by using them occasionally.

Many consumers make unmanageable financial situations worse by using credit cards and cash advances to pay their rent and keep their utilities connected. Attorneys with debt relief experience could explain that bankruptcy laws are designed to provide an escape from this type of situation, and they may also point out that filing a Chapter 7 or Chapter 13 personal bankruptcy petition will generate what is known as an automatic stay. This is a judicial order that puts at least a temporary stop to lawsuits and prohibits creditors from making any further attempts to collect unpaid debts.

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