Credit Cards
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by: barrywaters
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Word Count: 521
The findings of its yearly survey of consumer credit card behaviors was just released by Consumer Reports. One shocking statistic from that report shows that about 12 million consumers are still in debt from holiday shopping from the previous year. The flood of accessible loans and credit of the previous ten years allowed consumers to easily be approved for credit cards and also enticed many to rack up balances. Given the recent credit crisis, there is a trend in banks requiring higher minimum payments for balances on credit cards. Many consumers are turning to the use of credit cards, in the absence of once available loans and lines of credit. Though practical, credit cards can easily contribute to debt, if not used responsibly.
There are many advantages to using a credit card, especially if you are making an expensive purchase. For one, you do not have to carry a wad of cash in your wallet. Unlike paying with cash or check, credit cards give you some protection. If someone fraudulently makes a purchase on your card, you usually are not on the hook for more than $50 of that purchase. It is also easier to dispute issues you may have with customer service or a product, if you paid via credit card. The world of online shopping would not have been possible without credit cards. Thanks to your credit cards, you can buy diapers online and have them on your doorstep within a day. It eliminates the need for cash on delivery or money orders. Lastly, purchases made with credit cards can be easily tracked. You have to remember to keep and file receipts and invoices when you use checks and cash.
The convenience and security of credit cards have made them a common spending mechanism. But credit cards come with a dangerous allure. Many people only make minimum payments and continue to spend. Ideally, a credit card would be used with the intent to pay the balance when it is due. Doing so would mean that nothing would be paid in interest. Paying only the minimum payment each month means that most of that payment is interest to the bank, and does not pay down your balance. When consumers do not pay the balances on their credit cards in full, therefore, it is not difficult to increase debt.
Credit cards should be viewed as a method of payment, not a loan to buy things that a consumer cannot otherwise afford. Payment schedules should be followed to avoid fees, and balances should be kept within responsible ranges. If you responsibly purchase with and pay off your balances on your credit cards, you will also be able to handle emergency expenses more readily than if you carried balances on your cards. Remember that the credit cards are in your name and you own the balances incurred on them.
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