For a lot of people, credit card spending is a gateway to debt problems. There is a stigma surrounding the issue of credit card debt that has intensified since the credit crunch; the buy now and pay later attitude is no long in vogue. Now, thrifty is cool and being in the black is, well, the new black.
However, contrary to popular belief, a well managed credit card can sometimes be a cheap and efficient way to borrowing money. Serious debt problems will arise when you use your credit card debt to supplement your income. Making those regular, everyday purchases with your credit card, like using it to pay for fuel or the weekly shop, can be a dangerous habit to fall into. If you save your credit card for big ticket items that you’ve already saved and planned for, it can work out to be an efficient way to pay them off.
Shopping around for the best deal can secure a card that offers 0% interest on purchases and balance transfers, which means that you can borrow money without it actually costing you anything – as long as you stick to the terms of the agreement.
There is no denying the extra buying power that a credit card affords you. Be very careful about what you actually decide to do with it though. Buying things you don’t need purely because you can is a big debt danger. Spending irresponsibly can lead to late payments, penalty charges, blotches on your credit report and significant damage to your credit rating. This makes it much harder to secure credit and will tend to result in you paying a higher rate of interest.
If you don’t have a credit card and you’re considering applying for one, don’t go mad with the limit. Just because they’ve offered you a high limit, it doesn’t mean you have to take it. The more you’ve got, the more you’ll be tempted to spend. This is risky because if you struggle to make the payments it can turn into an expensive debt. Making affordable purchases and paying them off quickly is the only way to avoiding paying unnecessary interest.
Of course, Harrington Brooks are always on hand to help anyone who’s experiencing debt problems. Trying to buy your way out of debt with your credit card is never, ever a good idea. If you find yourself in a situation where you feel that the only way to afford your weekly shop, your bill payments or any other regular expenses is with your credit card, you need to talk to a debt specialist before the situation gets any worse. The longer you leave it, the more limited your options will become and the more serious a debt solution will be required to solve your mounting debt problem.
So, credit card debt needn’t necessarily be a problem. It can be a great way to borrow money cheaply but remember that it’s also fraught with potential problems. If you overstretch yourself and your financial situation changes, you could quickly find yourself if financial trouble.