Careless credit card use become a slide into bankruptcy

“Charge it to my credit card!! is ore of the easiest phrases to say when we shop. Rarely do we think about what we are doing or how that plastic card affects our life. For many of us it destroys our ability to control our money.
All we know is that we can instantly gratify our wishes to possess whatever we desire. In 1999, 1.287,000 people in the United States filed for bankruptcy mainly because of the misuse of credit cards.

Credit cards are a great invention. Properly used they afford us instant pleasure. But a careless credit card user fails to realize that he is digging his way into a deep financial hole with personal bankruptcy waiting at the bottom.

I am not suggesting that we stop using credit cards. I use them often and like them. But I do advise that we understand how a credit card works. We should know what the interest rate is on the balance of our charges. And we should fully understand that the careless use of one or several credit cards can create financial havoc in our lives.

Credit cards are issued generously by a variety of organizations ranging from local department stores to national retailing chains, banks, oil companies and, of course, from the giant firms specializing in credit cards alone, e.g. Visa, Master Charge, and American Express. Some are singlepurpose cards as Mobil or Shell fuel credit cards.
Other cards are multipurpose like Visa, Master Charge, and American Express.

When credit cards started in the 50’s there were no annual fees, but now the fee can be $25 up to $75 per annum. The finance charge can range from 12 % to 21 % on the unpaid balance. Many of us fail to consider this extra interest cost for an item when we purchase it. In fact, Sears and Penny’s earn 21%, on their credit cards’ interest. This is more than the profit margins of the items they sell.

To avoid becoming financially insolvent, consider several of the following suggestions for do’s and don’ts of credit card use.

1. Do always keep in mind that credit costs money. Know how much it will cost you to “rent money.”

2. Do shop for credit card terms as you shop for any other important purchase and buy the best terms. Compare credit card rates. They vary from issuer to issuer.

3. Do check carefully the maximum amount of credit you can soundly and safely carry. Remember credit companies are “selling money” and nothing else.

4. Do ask questions about your credit card terms and conditions. Read the literature explaining them as put out by the companies Know what happens if your card is lost or stolen.

5. Do ask yourself: would you buy this item for this amount of money in cash if you had the cash in your wallet or purse right now? In other words, have you thought out why you are purchasing the item?

6. Don’t buy anything you don’t need or wantcertainly not on credit.

7. Don’t own several credit cards. It is easy to spend more than you will ever be able to repay. It is difficult to know what you are spending if you keep using various credit cards. Before long you will be borrowing from one card to pay off another.

8. Don’t buy any large item without consulting your spouse if you are sharing financial responsibility.

A credit card can be blessing or a disaster. Study the use of a credit card. Become financially literate, or you may become financially bankrupt. Think before shouting:
“Charge it.” It’s your money.