Most_Americans_Should_Not_Use_Credit_Cards

Most Americans Should Not Use Credit Cards Sherrie Y. Saunders Com/156 Deena Martin 12/05/2010 Credit card use has given individuals the ability to live out of their income bracket and it is the largest issue with debt in this recession. In my personal opinion I believe that people should purchase small ticket items with cash and leave the credit cards for large ticketed items and emergency purchases only. In my experience with credit cards, I have gotten myself into almost $20,000 in credit card debt because when I did not have cash to purchase items that I wanted then I would pull out my cards and start swiping away. As long as I made minimum payments on my monthly bills the creditors had no issues with approving my purchases. I was buying items that I would not normally purchase if I had to pay cash for them. I started to live beyond my means and I use more than half my income repaying debt. The other issue I have with using credit cards is that a few times I paid my credit card bill late for simple reasons and the creditor raised my interest rate from six percent to an unreasonable twenty six percent. Rate increases also make it hard for repayment of credit card debt. Are you or someone you know a victim of credit card debt' “The statistics tell the tale. According to Equifax Inc. (EFX), a credit cards analysis firm, people have been buying more with their credit cards but paying down less. As a result, average balances jumped nearly 9% in 2007 and delinquency rates recently hit a four-year high of 4.5%.” (Tardiff, 2010) Many people think that becoming overwhelmed with credit card debt cannot happen to them but they are sadly mistaken. Earning credibility and acquiring a high credit score is important to obtain high end purchases when wanting or needing them. Owning credit cards and using them wisely will help build good criteria with lenders hence gaining some financial stability; however, if not careful the tables can turn really fast and consumers will find themselves in deep financial burden. When someone purchases a home the first thing lenders do is start sending out other loan and credit card offers, some even send the cards out to homeowners without waiting for them to fill out an application and all the homeowner has to do is call to activate the card. Accessibility is not an issue for someone with good credit and that is how the lenders rope consumers in. There are many devastating effects of careless use of credit cards. A persons health can be affected when the stress of not knowing how to solve their financial woes becomes too much for them to bear. No purchase is worth anyone’s health or sanity, is it' Credit cards can be convenient in some circumstances; however, the downsides to using credit cards outweigh the good. In society today there is a greater need to use credit cards for the convenience of making car or hotel reservations, use of a second identification, or in case of emergencies when there is no cash on hand. Credit cards can help build credibility and a yearend summary report is available to consumers for the ability to keep track of funds. Keeping track of purchases when they are in cash is not impossible, but it is very hard and that is why the convenience of receiving a yearend statement is important. Having a credit card does not mean that they should be used all of the time. Most people of all ages have self control issues which in turn causes all the negative effects of credit card use. The purchasing starts small with little low priced items here and there then before long high end purchases and frivolous spending has resulted in a mound of credit debt.” While using your credit card wisely can help you to build your credit score, misusing your credit cards can actually hurt your credit. Part of your FICO credit score is based on how many accounts you have open and the ratio of balances to overall credit limits. If you have multiple credit cards with balances that are close to or at the limit, this will be reflected negatively in your credit score. This, in turn, can result in costing you more money in terms of the interest rates you can get for other types of credit, such as a mortgage or car loan.” (Lake, 2010) The available use of credit cards provides a genuine ease for consumers. As time has passed more consumers began to rely more prominently on credit cards to help them through a rough recession. President Obama has created a credit card relief program aimed at relief for the numerous debts that have been incurred over the time of recession. The high rate of unemployment has taken away some people’s ability to repay their current bills, which multiply fast when all the fees start to accumulate. These programs would not have been created if there was not a real problem with credit card debt and credit card companies acting like predators. It may be fine to have a credit card or two kept close for purpose of gaining credibility or for emergencies but most people should not use credit cards, especially if they cannot manage their finances too well. Most Americans should not use credit cards because credit card use has given individuals the ability to live out of their income bracket, and they are the largest issue with debt in this recession. The bad outweighs the good. Some bad habits in credit card use are carrying too many cards in your wallet, charging when you have cash, excessive use of cash advance privileges, not communicating with the additional card holders, missing payments, losing track of purchases, and not paying enough toward your balances to get them paid off faster. I would suggest trying to keep good habits such as paying on time, paying the card balances off, keeping receipts, and keeping track of information that lenders send you about your accounts. Avoid the swiping fever! The only sure solution with solving a serious problem with credit card debt is to abstain from any activity that will create it. Reference Lake, R (2010) The Negative Effects of Credit Card Use. www.ehow.com http://www.ehow.com Tardiff, J (2010) Understanding Credit Debt. Detroit Greenhaven press. http://news.goldseek.com