Thursday, June 28, 2012

Harsh Reality of Credit Card Debts


Do you find yourself in your mid 20’s and you are paying debts than you had initially planned? Debts that are usually planned should not cause you any distress. If you enter the contract of a loan, you are expected to be able to set aside enough amounts to be able to pay off the loan. The more common reason why some people find themselves deep in debt is because of mortgage and credit cards. Since mortgages are usually planned, let us focus more on credit card debts. 

More and more banks are making it easier for individuals to apply for a credit card and it is alarming that some (if not most) of their clients are not even really qualified to have the power of purchase using a credit card. This kind of debt is very dangerous to carry because if you leave it unpaid for a very long time without settlement, you might end up having to file bankruptcy. This is something that you need to watch out for. Credit cards are not really all that bad if you know how to use it. It can be a great source of emergency funds. You can even hook it up with your line of credit for your checking account. This should give you the convenience to use your debit card without having to worry about getting declined. This however can be costly if you are not careful. 

The best thing to do is bring cash or your debit card when you go shopping.  If you use your credit card right away, you may end up paying interest for every item that you get. If you use your debit card, you would then have to spend the money that you do have. This should always be a good idea when it comes to making sure that you are not paying unnecessary interests. If you really want to use your debit card, make sure that you check your balance beforehand to make sure that you will be able to set a proper budget for your grocery or shopping. As much as possible, avoid using your credit card because it is just going to be one item after the other and before you know it, you have reached your limit. You also have to resist the temptation of having to open a new credit card account just because you got pre-approved for one account. This is just plain stupid because I do not see any reason why one would have to open multiple card accounts. You are just going to have to pay 2 annual fees and it is just more reason for you to be tempted to purchase items that is way too expensive. This kind of purchase would usually end in tons of regret. If you do have multiple cards now and you want to be debt free soon, better close the others and just leave one. The more you get in touch with your finances as early as now, the more change you will be able to avoid filing for bankruptcy.