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The Ugly Truth Behind Credit Card Debt

The Ugly Truth Behind Credit Card Debt

Credit card debt is one of the leading causes of financial crisis in America and for most part of the world. Indeed, lots of focus by economic experts are geared towards analyzing the benefits or disadvantages posed by the use of credit cards. There are also several factors that are involved with credit card use that could impact the way an individual manages his or her finances.

Is Credit Card Important?

Several individuals are enticed to secure their own credit cards because they are lured by the many advertisement claims about how it can make your transactions a lot easier. While credit cards do offer a few benefits, it is outnumbered by the financial discrepancies caused by owning a credit card.

What many people do not realize is that using credit cards to pay for their transactions or bills actually result in them spending more. In fact, the same can be said even if you are religiously paying your bills on time. So you can just imagine what those credit card owners who aren’t making punctual payments are going through financially!

Credit cards are beneficial in a few instances such as having convenience of extra finances for emergency situations, or safety during travel. However, the interest rates can be quite a burden on some families who earn only minimal income each month. Also, there is the possibility of misuse since it creates a false sense of financial security that often ends up in people having massive credit card debt.

Cash or Credit Card?

Budgeting is an essential aspect of handling your finances. This is often neglected when people have to rely on credit cards to make their purchases. Therefore, some people are on a toss-up between which is the better means of making financial transactions, either on cash or through credit card. Here’s what would help you decide more effectively.

Imagine yourself paying on cash during purchase. There is an emotional attachment to that money, which you have worked hard on earning, that makes you unwilling to let go of it. However, the case is different with using credit cards for purchase. There is none of that emotional attachment and you can simply swipe away without remorse.

Using credit cards to make your purchase instead of paying on cash could end up in you spending about 12 to 18 percent more than the actual value for the item if you paid with actual cash. Imagine how much could have gone onto your savings!

Teenagers and Credit Cards

Credit card companies are targeting teens on their ad campaigns, however it is not a good prospect for parents, especially if you want to teach your kids on how to become responsible with their personal finances. This is more true based on the fact that teenagers have the tendency to be impulsive and with credit card in hand, it creates that false sense of financial security that they can afford anything they desire. Instead, make them work hard to achieve something they want, especially in the material aspects.

Financial Security

If you want to achieve more financial security, credit cards is not the way to go as it exposes you to risks of acquiring credit card debt. But if you are going to opt for one, make sure you have an effective and practical approach at spending. There are a few advantages offered by using credit cards but it does not make an effective replacement for cash whatsoever, unlike most credit card holders believe.

The Truth About Secured Credit Cards

The Truth About Secured Credit Cards

Credit cards are everywhere and are needed for so many different things, especially with our increasing technology; such as the internet. With the internet available, without a credit card you could not making reservations, shop online or even pay certain bills online. But, what about those without perfect credit or no credit all? What kind of credit card can you get? The answer to this is a secured credit card.

Secured credit cards are cards where you have to pay an annual fee, but also put up cash, which ultimately becomes the limit on the credit card. If your payments remain in good standing you may be eligible for certain rewards and an increase in your credit limit without putting any more money up for collateral.

A bad thing about secured credit cards is the fees that come with it. Everybody knows that 95% of all credit cards come with an annual fee, don’t get me wrong some do not come with annual fees, but most do. A negative about the fees for a secured credit card is that a majority of them are much larger than an unsecured credit card.

Another bad thing about secured credit cards is that the APR (Annual Percentage Rate) is usually more as well. Both of these things mean more in fees, but either way, it makes up for it if you do not have that great of credit or no credit at all. Just knowing that you can build up your credit and eventually get an unsecured credit card can help.

Secured credit cards are available for those with bad credit or no credit. If you have ever gone through a bankruptcy or any other life changing event, then a secure credit card is the credit card that you need to begin looking at in order to start to rebuild your credit or even give yourself a head start on getting credit. Secured credit cards are much easier to get and can help you out in the long wrong.