The dangers of using a credit card
Nowadays, credit cards are nothing out of the ordinary: many people even have a few of them. This reality is, of course, with good reason. It is true that a credit card offers many advantages.
For example, it allows you to make large payments without the safety risk of carrying around cash. It’s convenient: you never have to search for an ATM or place yourself at risk in unsafe areas.
If you need a large sum of money urgently, you can get hold of low-cost loans via revolving credit. Probably the most important advantage is that you can build positive credit.
By using your credit card in a controlled manner, it can help you to establish credit for the first time, or rebuild credit if you had difficulties in the past.
Unfortunately, the ease of credit cards can be deceiving. Too many people do not realize just how dangerous credit card debt can become if not controlled.
Some of the biggest dangers of credit card use:
- The high-interest rates and annual fees typically associated with credit cards often outweigh the benefits. It might end up becoming very expensive. If the amount you owe grows much faster than your ability to repay, which is the case more often than not, you will be left in serious financial trouble. To top it off, the savings offered by credit cards can be found elsewhere.
- Your credit record is very vulnerable. Miss a few payments and the damage is done. Having a good credit record is crucial. For example, having a bad credit record will limit your ability to borrow money; it can impact your ability to rent an apartment, and even impact your insurance quotes.
- Credit card debt sabotages nearly all your attempts to save any money. Credit card debt will ruin your best intentions to save up for retirement. It might even lead you to mistakenly believe you are saving up for retirement, but if you owe too many credit card companies, the money you think you’re saving isn’t really yours.
- The credit card trap can deepen your debt. If you swipe your credit card without discipline, you may find yourself in big trouble before you even know what hit you. The more you swipe, the bigger your total balance becomes, and your monthly minimum payments will increase along with your balance.
- One of the biggest dangers of credit card use might be the psychological trap: a credit card makes it possible to spend money that isn’t yours and live above your means. It is just too easy to swipe that credit card.
By all means, make use of this useful tool, but be aware of its pitfalls.
If you need a debt review speak to Zero Debt today for a free, confidential, no-obligation consultation.