You may find yourself arguing that credit cards really aren’t that bad, and that they do indeed service a purpose if you manage them correctly.
The reality is most of the time, like in upward of 90 percent of the time, credit cards aren’t even close to be a smart decision financially.
Truthfully, the one time credit cards can be seen as feasible is when you’re paying off the balance the moment the first bill comes or if you have some sort of introductory, no interest rate that you carefully and meticulously pay per month until the balance is paid off at the exact time that promotional rate is gone.
Aside from that, using credit cards may seem convenient at the time, but they’re costing you a small fortune. Making the minimum payment on a $5,000 balance is going to mean that the credit card will end up costing you nearly $20,000, when you consider an interest rate between 10 to 20 percent, which is about where you’ll end up.
But the truth is that most of us are used to using credit cards for, well, just about everything. The latest credit card stats versus how much we spend our own money is startling, with a two to one margin in favor of credit card sales versus spending cash or using a debit card.
The real issue isn’t so much that people are using credit cards for emergencies but for other more tangible purchases that really should be nowhere on the credit card use radar, such as a vacation or using a credit card to put a down payment on a house or car.
Now some argue that credit cards aren’t so bad, and list a host of reasons why you should use them, citing things like reward points, free travel miles and, more practically, they’ll help you build your credit score and manage debt to the point that other creditors will entrust you with their money as far as a loan is concerned.
Those points are valid, but the real trick is managing credit and not letting it get away from you to where you become someone who is charging hotel rooms and beach trips on your Visa card, when in actuality you can’t afford the vacation anyway. If you want to manipulate credit cards and earn valuable rewards and keep the balances well under control, then so be it. But as easy as that sounds, credit cards are the proverbial slippery slope that could easily leave you sliding in the wrong direction financially.
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