Credit Cards: Important, but Deadly

by Justin Weinger on September 6, 2012

Credit is something that most everyone will need at one point in their life.  The problem is that building credit can be difficult and often creates opportunities that will quickly put a person into debt.  The issue is that credit cards are the best way for a person to build credit, but leave a person open to spending more money than he or she actually has.  Of course the company will allow a person to make payments, but the heavy interest charges can often put a person paying double or even triple the amount that was originally ‘borrowed’ on credit.

The first thing to understand is that credit card companies do not often have to try and cheat an individual.  The allure of credit is often enough to get people to sign up for credit cards; there are usually promotions or gifts that go along with signing up, but these things are all carefully calculated expenses that the company plans to make up through interest or other penalties.  Many credit cards are even charging annual fees, which mean that even if a person is faithfully paying off his or her bill before it gains interest that he or she is still paying a fee to own the card.

Credit is important in order for a person to buy a house or a car; this is the reason why a person should get a credit card, but it can really test a person’s willpower to have that little piece of plastic which allows them to buy now and pay later; the fine print just happens to mention that the person will pay a lot more to have it now, but many people ignore that because they want the new toy right now.  A credit card does not have to be an evil device that leads a person into a lifetime of debt.

A smart individual with a good budget will use a credit card only for its two primary purposes.  One is to build credit and the other is for emergencies.  By paying off the bill each month, a person will avoid the interest charges that normally go along with buying something on a credit card.  If a person is frugal and has a budget, then he or she will know how much can be spent and not go over that limit.  The advantage is that the money will go through the credit card and build credit, instead of building no credit if the person just paid in cash.

Credit cards are a necessary evil and should never be seen as ‘free money.’  That is why so many people are in debt and often send a majority of their paycheck to the credit card companies.  There are some debt consolidation possibilities, but many of them are just a scam for a third party to make a bit more money off unsuspecting people.  The best cure for credit card debt is to never obtain any debt that cannot be paid off within the grace period, before interest begins accuring.

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