Question

Ben feels overwhelmed by his debt obligations, and his credit cards are a major reason. He didn’t receive financial help from his parents while he was in college, so he took out loans to pay for his tuition and fees. He delivered pizzas several nights a week, but his tips barely covered his books. When credit card applications arrived in the mail almost daily, they seemed like the answer to his prayers. He applied and was approved much to his surprise. Since then, he’s been using credit cards to pay for almost everything.

What is a signal that Ben is overusing his credit, and may experience several financial problems if he doesn’t change his behavior? How do you suggest Ben change his behavior to establish and maintain good credit in the future?

Answer 1

These are the signals that Ben is overusing his credit card ,as given in the statement.

· He is overwhelmed by his debt obligations

· He is using the credit card to pay for almost everything.

First of all BEN is financially inexperienced .Since he didn’t get any financial aid from his parents , he tried himself of earning to meet his expenses but it was inadequate.

He realized that the need of financial back up to meet his expenses is necessary and got answered by a credit card.

Since he thoroughly knows the value of money, he can maintain a discipline in his life by the way of

· Take out money not more than needed

· Anticipate the credit amount to be paid as well as the monthly interest ,spend accordingly

· Credit worthiness to the repayment shouldn’t be spoiled, it will affects   the future with the concerned bank. Repayment should be on time, else it will give a negative to the credit score.

· Withdraw little as possible whenever it is absolutely necessary

· Great care to be given for the amount withdrawn, manage ethically.

· Make sure that the money he is withdrawing can be repaid

· Always ensure that the Debit to income ratio be ideal.