4 reasons to kick the credit card habit
By Walecia Konrad • Bankrate.com

No one likes to feel out of control, whether it’s how much you eat, how much work you have to do, or how much debt you have to pay. And just about everyone knows, overspending on credit cards is something that can make you have that sick feeling, sometimes to the point where you dread even going through the mail each day for fear of opening your credit card statements.

4 reasons to kick the habit 1. Improve your credit rating 2. Save more money 3. Be happier 4. Protect your home

The fastest way to get rid of that pit in your stomach? Take control of your credit cards now. To get motivated, here are four reasons why you'll feel better and your financial health will improve, too.

You'll improve your credit score
Every credit card you apply for, every payment you make and every credit card misstep you take is recorded, along with your other debt information such as a mortgage or student loan, by the three major credit reporting agencies. That information is then compiled into a credit score. This number indicates how financially responsible you are when it comes to paying your debts, and it can say more about you than your address, SAT scores and salary combined. Your score -- which will range between 300 and 850 points -- determines whether you can borrow and at what rate. It's also used by many auto and home insurance companies to price premiums. Landlords and potential employers routinely use it to screen candidates. To find out what your score is, you can use a FICO calculator to get a rough idea. It's free. Or, you can purchase your credit score from any of the credit reporting agencies or FICO. Anything over 660 is good. Higher than 720 is great.

You'll stick to your budget and save more
Research shows that Americans who use plastic spend 15 percent to 25 percent more than they do when they leave the cards at home and pay in cash, says Manning. These extra purchases can blow your budget each month. But if you can train yourself to use credit only for what you need, you'll get both the convenience of plastic and the satisfaction of putting the money you would have spent on impulse buys straight into the bank. Bankrate has a work sheet that lets you create your very own spending plan.

You'll be happier
Nearly half of the people who have problems with debt experience symptoms of depression, according to a survey conducted by Myvesta Foundation, a nonprofit consumer education Web site. And, credit card debt is the No. 1 culprit.

On the flip side, a recent Roper survey shows that people who save just 5 percent of their income are much happier overall than those who don't save. These are the people who are most likely to keep spending in control and pay their credit card balances in full each month. Then they have a little leftover to put away each payday.

You won't jeopardize your home
When people get into big credit card debt, they often take out a home equity loan to consolidate payments at a lower interest rate, says Manning. Now that home appreciation is slowing, chances are greater that when those people go to sell their home, they won't make enough to cover the home equity borrowings. Worse, too many people use a home equity loan to consolidate existing debts, then go ahead and charge the cards up again.

Walecia Konrad is a freelance reporter who specializes in business and personal finance, and is based in Brooklyn.

Do you have a secret to success with credit cards? Or, are you struggling? Share your story.

-- Posted: Feb. 20, 2007