Occasionally, a client will come into our office with an annual income ranging from $15,000 to $30,000 per year and $20,000-$30,000 worth of credit card debt . One of the first things that the client will tell us is that his credit rating is “A1.” All credit card payments have been made on time. Thus far, he has had been ‘keeping up’ on all of his obligations. In the most technical use of the terminology the client is correct. In the real world, the client is likely just fooling him- or herself.
Taking a cash advance on credit card ‘A’ in order to pay the monthly payment on credit card ‘B’ is not ‘keeping up.’ Neither is using current salary to make the monthly payment on the credit card while at the same time using the credit card to buy food and clothing in amounts which exceed the credit card payments. Indeed, the client is falling further into debt each month, using another’s resources (the credit card company’s) to cover the spread.