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Whose fault is it?
Why have we become so enmeshed in credit card debt? Some people blame the credit card industry. The credit card providers make it tempting to load up on cards. After all, if we didn’t have these cards, we wouldn’t be enticed to spend all of this money, right? Wrong.
Are we scapegoating?
Of course, the credit card companies do engage in some unethical practices. But the fact is, we’re really scapegoating the credit card providers for out terrible spending habits. Most experts say that any shady practices done by the credit card companies pale in contrast with how we use our credit cards.
How we mismanage our cards
The problem is that most of use our credit cards as a form of extra income when we want to buy something we really can’t afford. This is why an estimated 160 million people spend more than they earn.
A bad relationship
Putting aside our spending habits, it’s pretty clear that we have a poor relationship with our credit card companies. We tend to not pay off our balances each month. In fact, about 46% of Americans don’t pay their balances in full every month so end up accumulating hundreds or even thousands of dollars in interest and penalties. These penalties are for making a payment late or for going over our credit limits and are meant to encourage us to limit our spending instead of increasing it. Paying these fees is like throwing money down the drain.
How credit cards can help us
Credit cards were never meant to be an extra source of income. They were created to be a convenience and to save us money by giving us an extra 30 days of interest free money on the stuff we buy. Their interest rates were designed to penalize those who failed to pay their balances on time but, at least initially, were reasonable enough that we could use them in times of a financial emergency. If we use our credit cards that way, they can help with our financial health. In addition, many of today’s cards come with some kind of rewards. If you have one of these cards and charge up, say, $10,000 a month and get 2% cash back, that’s $200 of “free’ money a month – assuming you pay your balance in full every month.
When you use your card sensibly
If you use your credit card sensibly by paying off your balances every month, you should have a pretty darn good credit score. Since your score dictates how much interest you’ll be offered or what your credit limits will be, this can also help. For example, if you have a score of 696 and the lender’s cutoff point is 700, you would be missing out a better interest rate by just four points and basically paying additional interest for no good reason.
When credit card debt spins out of control
If you find yourself head-over-heels in credit card debt, there are options for getting it back under control. We here at National Debt Relief have helped thousands of Americans reduce their debt and become debt free in 48 months or less. Don’t let debt rule your life. Fill in the amount you owe under the “How Much Do You Owe?” section above and let us get started helping you get back onto the path of financial freedom.