In times of financial hardship, credit cards can be a life saver. Not only can you extend your limit to buy the things you really need, but you can also claim back reward points, which can be used to supplement your next bill. For those you are unable to manage their money however, credit cards can be extremely dangerous, and can leave you with vast amounts of debt, as well as a sketchy credit history.
Whether you’re a fan of credit cards or not, there’s no doubt that they play an essential part of everyday life for people all over the world. In many cases, credit cards can be good tools to have they will improve your credit rating the more you use them, but only when you pay your bills on time. If you fail to pay on time, or miss your minimum payment altogether, then credit card companies will be straight on your case, and rarely let up.
Because credit card companies make borrowing money a lot easier than applying for bank loans, it’s no wonder why people find them so attractive. Applying for quick credit usually means that you’re in need of fast finances, and if you’re already behind on your bills, then credit cards are not the way to dig yourself out of the debt hole.
We’ve all been there at one point or another, mindlessly spending money we don’t have on gadgets we absolutely need, holidays and clothes. If you’re credit has never spiralled out of control, then you’re one of the lucky few, and sadly millions of people every year are forced into insolvency because they’re unable to pay back what they’ve borrowed.
Black Holes
Credit card companies and banks openly take advantage of society’s desire to spend, spend, spend, and that’s why they make it so easy to get a credit card. From late payment fees to account charges, these companies make billions every year, but make no effort to deter the public from applying for credit that they simply can’t pay back.
When it comes to paying your bill, credit card companies offer customers a minimum amount, a figure that will keep the creditors at bay until your next statement. Little do people realise, is that paying the minimum is actually bad for your credit rating, showing that you’re over spending without being able to pay back a decent percentage of your debt. Worryingly, millions of people all over the world are applying for a credit card, and thus becoming slaves to credit card companies
Positive Financial State
No matter what age you are, it only takes one wrong financial decision to destroy your credit rating, so you must ensure that you don’t fall into the credit card trap. Your attitude towards borrowing is the first issue you have to address.
Credit is not real money its borrowed time until you are required to pay back what you owe plus interest! If you do own a credit card, make sure you take advantage of the benefits, instead of letting the creditors take advantage of you. Don’t allow the interest to pile up only borrow what you can afford to pay back.
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Written by Jon the Saver
This post was written by yours truly, Jon Elder. My mission is to help you succeed in your personal finance life. Join me on the journey to financial freedom! You can subscribe through RSS FEED or EMAIL updates. You can also find me on TWITTER
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It’s unconventional to some but there are people would save even more if they used credit card. Of course they donâ™t let interest pile up by paying what they owe in full and before the due date. Because of their credit card, they can actually track where their money are going. Still, we encourage that you need to be smart and in control when using your credit card.