The Dangers Of Credit Cards
It is important to be mindful of the dangers of credit cards before getting one or continuing to keep what you have. Credit cards are fairly easy to acquire and almost every store accepts them, so you ought to understand the fine print of the credit card terms before using them.
Credit cards are not bad in and of themselves. When used with discipline and awareness, they can be viewed with a positive mindset, but when they are abused and the fine print is ignored, they are viewed negatively.
When you use your credit card and charge an amount of money, it is best that you pay off that amount when you get your monthly statement. If you don’t, you will be charged an interest fee. If you continue to use that credit card and only pay a minimal amount each month, it may become difficult for you to pay it off. What you may be paying each month is simply the interest charge alone, which will not decrease your bill in any way.
The dangers of credit card become a reality to many people too late. They may get several new credit cards a year, such as J C Penney, Best Buy, Visa, Discover, Sears, and so on, and before they know it they have 15 credit cards with a balance on each one. If each card has a $1000 balance, that totals $15,000-which is a huge financial burden to carry.
Bankruptcy is one of the dangers of misusing credit cards. You may find yourself having to claim bankruptcy because you simply cannot afford to pay all of your credit card debt’s minimum payments. Claiming bankruptcy will harm your credit score, could potentially hurt your chances for certain jobs, and possibly increase your auto insurance.
If you are in consumer debt and feel like you will never be able to pay off your cards, you can always contact each credit card company and discuss your options and ask them to lower your interest rate. Some companies will work out a payoff deal with you, or settle with you, but be aware that this will affect your credit score and you will owe taxes on the amount of money that is settled.
To avoid the dangers of credit cards, you have several options. First, don’t have them. Despite popular belief, you do not need to use a credit card to get “good” credit. If you do have credit cards, limit your use to one or two. I know some people who shop at department stores like to use them to receive incentives-which is fine, but be sure to pay the balance off each month.
The best option is to simply have one credit card in case of an emergency. You do not have to use it, but you have it just in case you need it. Being responsible with your personal finances includes being responsible with credit card use, so use them wisely.