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The benefits and pitfalls of flashing the plastic
by Ben Novak

When credit cards first became a reality, the business world heaved a sigh of relief. From that moment, it is no longer compulsory to have lots of cash before buying stuffs, with a credit card you can make credit purchases and pay later. This provided a massive boost to sales and revenue and provided the consumer with a handy tool for making purchases, without the need to carry about large amounts of cash.

Yes, using credit cards is a very convenient way of making purchases, but you should also take cognizance of the fact that its use is also riddled with many disadvantages and dangers. The worst of such is the problem of credit card debt that most often destroys a lot of people. As a result of this, most affected people find it difficult to move ahead in life. This is an easy trap to fall into and can affect people are sensible with other financial matters.

For the uninitiated, a credit card is no more than a representative of the credit account that you hold with the credit card provider. Every single payment you make with a credit is nothing but a borrowing, and allowing this to accumulate is what brings about credit card debt. It is in a sense no different than taking out a loan to buy a good or service. The rub comes with the sheer convenience of ’sticking it on the plastic’ rather than the more complicated and time consuming process of taking out a loan.

The total credit card debt is seen as the sum of the amount you owe your credit card company. You will know the amount you owe every month from the credit card debt statement that will be sent to you but you have to pay up this amount before a payment due date. This is a common feature of most credit card agreements. The difference lies in the varied rates of interest charged by different providers and to different card holders. Credit card providers will often offer incentives to transfer balances to their credit cards

You will surely be given an option of making a partial payment, but failing to do this will make you acquire late fee and interest charges. This is certainly to be avoided not only for the impact on your outstanding balance, but also for the negative impact on your credit standing

A good way to avoid paying high interest charges is to ensure prompt payment of credit card debts, and avoid, as much as possible, doing so with partial payments. Making the minimum payment can become a habit but can be very expensive in the long term, especially with large balances.

Thus, it is vital that you put your spending under a leash, because doing so is a sure way to keep off the cruel circle of credit card debts. Many people who have avoided debts in other areas have accumulated massive debts with credit card companies. Such problems are often exasperated by serious financial events such as redundancy or long term illness or the death of the major bread winner

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