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| People spend their money too fast |
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Credit cards started to be more and more popular. The reason why this happened is because a credit card allows you to buy items even if you don't have any money. A credit card is going to charge he money needed to their bank account, and this way if you use a credit card you will be allowed to pay that money later.
So a credit card will allow you to spend a lot more than you can afford, this way the consumers will always have the impression that they are able to spend more than they earn. Credit cards are one of the fastest way to get a loan. This is happening because it's an unsecured loan, and all the paperwork is reduced a lot more than a normal secured loan. So basically everybody can go to a bank, get a credit card and start spending money that they don't have. Everybody wants to have a higher life style this is the reason why people start to buy more things that they can't afford.
If you are just walking by on the street that you live, you will probably see a lot of stores out there that are offering interesting products. And each and every store accepts credit card payments. This is why you will be tempted everywhere to use it.
Going out and shopping around it's easy, and usually doesn't cause any problems. The real problem will begin the moment you will see your first credit card monthly bill. There you will be able to see how much you managed to spend during the last month using their credit card for their purchases. And also they will see how much they have to pay each month. When you will begin to pay back your credit card debt, you can do it by selecting one of the 2 ways available. First you can pay only the minimum amount that they will let you go on with it, that usually only covers the interest rate, or you will do some efforts to pay more than just the interest rate, and only this way you will be able to do something to make your financial life better.
Credit card debt is the worst type of debt that you can have. The main problems with credit cards is that they have a high interest rate. On average a credit card has an interest rate of 18-30%. This is why if you have borrowed $10k you will have to pay each year $3k for that type of debt only. So if you are going to pay the minimum, each month, all you will do is go deeper and deeper into debt, and live from one paycheck to another.
Also the credit cards are the number one reason why people will start to have problem with their credit score. The credit score system will become lower each month if you are going to miss a credit card monthly bill. And also since the credit card monthly bills will be high, it's easy to get into that situation.
My advice is that you use credit cards as rarely as possible. You should open up two or three credit cards accounts, but you should always have the feeling that you are doing something wrong the moment you are paying something with a credit card. You should get that feeling because you are going to pay a lot more for the stuff that you are buying. I think that credit cards should be used only on emergencies. Like you are not at home, and you are very hungry and you need something to eat, and you don't have any cash on you that moment so the best thing to do is to go to a cash machine, and use a credit card to take out few bucks and get something to eat. But you should not use it for example if you are in a Mall and you start seeing clothes and bags and other things that you don't really need, and you start using your credit card to buy all that stuff that is not very important to you.
If you start having problems to pay back the credit card debt that you have, you will get in trouble with your credit score. Each missing monthly payment, each late payment each wrong step that you will take due to the fact that you've used credit cards is going to your permanent credit score report. And it takes around 10 years for that report to be cleared. This is why you should always think twice before you use a credit card from this moment on.
The credit cards companies don't care about you, or how you got yourself into this financial situation. There is just one thing in the world that they care: their money. They will do anything it's possible to get the money from you. Right now they have doubled their payment requests. And they are going to get their money back, plus late fees, plus extremely high interest rate. Be sure of that. Right now there is just one type of loan that it's even more sharky than credit cards: payday loan. You should never try, not even think about getting a payday loan to pay off other debt like credit cards, this is going to get you in even more trouble. Right now there are some companies that are willing to help people that have credit card's problems they are offering all sorts of services that are linked with this type of debt: credit counseling, debt consolidation, debt management + others. So there is a way out of this mess without bankruptcy.
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