Minimum Payments and Credit Cards
View PDF | Print View
by: barrywaters
Total views: 128
Word Count: 540
Consumers Reports recently issued the results of their third annual credit card survey. It found that 12 million people in this country still owe money from holiday spending from 2007. An increase in available credit the past decade has made it very easy for consumers to have multiple cards and has lured many into spending beyond their means. As a result of the crisis in the credit industry, banks are now more risk averse and are tightening the lending reins. Some consumers that are financially strapped in the current economy are relying on credit cards rather than loans. When credit cards are used in this manner, it is tempting to let the balances ride and increase debt.
Credit cards are a part of everyday spending for various reasons. If you did not have a credit card, you would have to carry a large sum of cash or a checkbook. Unlike paying with cash or check, credit cards give you some protection. If a charge that you did not make appears on your statement, you are most often not responsible for paying anything more than $25 or $50 of that charge. 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. Credit cards allow you to quickly purchase something and have it delivered to your door. You do not have to hassle with waiting to send a check or money order. An added bonus is that everything you buy with your credit cards can be easily monitored, itemized and put into budget tracking software. 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. Credit cards can also seduce consumers into easily spending more than they should. It is all too easy to pay the minimum payments each month and keep increasing the balance. In a perfect world, all purchases made on a credit card would be paid in full each month. 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. By regularly paying only the minimum payments each month and continuing to make purchases on those credit cards, a consumer can easily get stuck in a cycle of debt.
Credit cards are a very practical and convenient resource, but should not be used to pay for unnecessary things that push consumers beyond their means. 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. Only you are accountable for the balances you carry on your credit cards.
Find more Credit cards | Credit cards |
About the Author
Find more related to credit cards for bad credit, visit getsmart.com/credit-cards.
Rating: Not yet rated