Why a credit card can be a bad idea for debt management
Credit cards can do more harm than good. If you weren’t aware of this before then it’s really time to put it into perspective. Credit cards not only tempt you to make exorbitant purchases, but they also can have high interest rates that are detrimental to your financial situation. Acquiring a credit card is exactly what credit card holders want you to do when you’re in debt. What they don’t tell you about is the loan sharks and harassing phone calls that could possibly await you when your cards get canceled and you’re left with an incredible amount of debt. As illegal as harassing phone calls are, they still happen in this day and age.
Bottom line, credit cards aren’t the answer to your debt problems. They only create more debt! Let’s look at an example of how a credit card can be detrimental to your financial situation. The average person has 2.7 credit cards to their name. The average amount of debt a consumer has to their name through their credit cards is way more than they should have. It runs into the thousands of pounds! If you don’t pay off what you owe each month the interest starts to pile up. How so? Well, credit card companies are clever. Let’s say you charged £1,000 in purchases. If you don’t pay back the full amount you charged on the cards, the full £1,000 within the grace period, then you would owe the interest on the full £1,000 in purchases until you paid back every cent. Even having 1 measly pound left in debt on the £1,000, after the grace period, would cause the full £1,000 to accumulate interest until the balance of the debt is paid back in full.
So you see, even having a measly £1 in debt from purchases can cause the entire £1,000 to incur interest charges. If you must own a credit card, which we highly disapprove of, then you must pay back every penny you owe within the grace period. Otherwise, all of the purchases, every single one, will acquire interest charges until it is paid back.
So you see, this is just one way that credit cards have you trapped. They know that the average person is never going to pay back within the grace period. You can be sure that they are counting on you making purchases that aren’t within your means. Anything you can do to save money without having to own a credit card would be a wise decision. Therefore ensure you check the small print to ensure your card has interest free purchases for a set introductory period.
Don’t fall into the credit card trap, and if you’re already part of it, check out more of our articles on how to save enough money to cancel them for good. We have tons of money saving tips and ways to live frugally. Not only that, but we show you how to live frugally and use it to your advantage. The more money you can get saved and invested, the better your debt situation will become.
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