Personal Finance Advice: Relying on Credit Cards
By Brad McDonnell on Monday, July 23rd, 2007 :: 11:51 amCategory: Watching Out 4 You
When consumers find their incomes depleted, they often turn to credit cards as a reliable source to fund everyday expenses. The $4 pack of cigarettes or $6 extra-value meal you purchased on your credit card costs you 18 or 19 percent interest or more in the long run.Roll those purchases into your overall credit card balance and make minimum payments each month, and you may still be paying off that small purchase a year later, while the product’s value diminished completely when you smoked that last cigarette or finished those French fries.
Credit Card Debt
Using your credit card as a purchasing tool is not all bad, as long as you buy something that generates value. When you use your high-interest card to buy items that quickly diminish in value, such as disposable goods like food, then you’ll be paying for that item long after its value depletes. As interest accrues on your credit balance, the price you paid for that item continues to increase while the item’s value depreciates. When consumers turn to their credit cards as the main source of money, it’s often because they have no other choice. Either a job loss or a medical emergency landed them in desperate financial situations, straining their income to pay the monthly bills. They rely on credit cards to buy dinner, groceries and other everyday items. This cycle of credit spending further contributes to their debt.
Advice for Credit Users
If you’re among the thousands of Americans who view their credit card as a pot of gold at the end of the rainbow, then here are some tips that can keep you out of debt.
First, when using your credit card to buy disposable goods, you should try to pay off as much of balance as possible at the end of the month. This ensures you won’t continue to make payments on a pack of cigarettes you bought last year. Use the credit card as a front of money that must be repayment in a month, or else.
This next tip is for people whose credit cards are their only options to stay afloat. Whatever the problem was that landed you in a mess of debt, usually a job loss, try to regain your situation as soon as possible. You can use your credit cards to help pull you through hard times. But when things get better, throw away the credit cards and get debt relief. You can eliminate the debts you accrued by setting aside money each month or by enrolling in a debt-relief service. If the total amount of debt is large, you probably will benefit from a debt-relief service. To find out more, contact a Credit Solutions representative and receive a free debt consultation today.
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