Credit cards pose many dangers to consumers. Unfortunately, we live in a credit-based society, and as such, we cannot function well without credit cards. While they are necessary, credit cards create huge problems for many consumers because of a lack of proper education about the way they work.

Stop for a moment and think of a typical credit card balance. Imagine that you have a credit card with a $3,000 balance. In this example, you will stop spending on that card and pay the minimum monthly payment until the debt is paid in full. With this scenario, you will take nearly 40 years to pay off the debt. Over that period of time, you will pay over $10,000 just for the privilege of borrowing the money. In other words, whatever item you paid the $3,000 for will end up costing you $13,000 in the long run.

Many consumers, particularly younger ones, view credit cards as a way to access “free” money. They think that they can use the credit cards to buy whatever they want and then pay it off with monthly payments. Because of this thinking they spend more than they have repeatedly, creating huge amounts of debt that it takes a lifetime to repay.

Credit cards pose many dangers to consumers. Unfortunately, we live in a credit-based society, and as such, we cannot function well without credit cards. While they are necessary, credit cards create huge problems for many consumers because of a lack of proper education about the way they work.

The problem with this idea is the fact that credit cards are not free. In fact, you will pay a lot to use the money offered by the credit card company. You will pay interest fees every single month that you carry a balance on the card. You probably already know this, but you need to realize exactly how much these interest charges can be.

Stop for a moment and think of a typical credit card balance. Imagine that you have a credit card with a $3,000 balance. In this example, you will stop spending on that card and pay the minimum monthly payment until the debt is paid in full. With this scenario, you will take nearly 40 years to pay off the debt. Over that period of time, you will pay over $10,000 just for the privilege of borrowing the money. In other words, whatever item you paid the $3,000 for will end up costing you $13,000 in the long run.

Many consumers, particularly younger ones, view credit cards as a way to access “free” money. They think that they can use the credit cards to buy whatever they want and then pay it off with monthly payments. Because of this thinking they spend more than they have repeatedly, creating huge amounts of debt that it takes a lifetime to repay.

Of course, credit cards can be good financial tools when used wisely. You can build your credit rating using your card, and you can also use it to purchase products or services online where cash is not usable. The key is to only spend what you can repay before the interest charges start accumulating. This will protect you from the tremendous cost of credit card debt.

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Category: Finances
Keywords: bankruptcy laws, chapter 13 bankruptcy explained, bankruptcy information, bankruptcy