Responsible Spending with Credit Cards
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by: barrywaters
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The findings of its yearly survey of consumer credit card behaviors was just released by Consumer Reports. One shocking statistic from that report shows that about 12 million consumers are still in debt from holiday shopping from the previous year. An increase in available credit the past decade has made it very easy for consumers to have multiple cards and has lured many into spending beyond their means. As a result of the crisis in the credit industry, banks are now more risk averse and are tightening the lending reins. Some consumers that are financially strapped in the current economy are relying on credit cards rather than loans. Though practical, credit cards can easily contribute to debt, if not used responsibly.
Credit cards are a part of everyday spending for various reasons. For one, you do not have to carry a wad of cash in your wallet. Credit cards come with some safety nets too. If a charge that you did not make appears on your statement, you are most often not responsible for paying anything more than $25 or $50 of that charge. It is also easier to dispute issues you may have with customer service or a product, if you paid via credit card. And the click and mortar internet retail sector would not be able to sustain itself without payments made via credit cards. Credit cards allow you to quickly purchase something and have it delivered to your door. It eliminates the need for cash on delivery or money orders. Lastly, purchases made with credit cards can be easily tracked. If you pay with cash or check, you need to save receipts and canceled checks to keep track of your budget.
The convenience and security of credit cards have made them a common spending mechanism. But credit cards come with a dangerous allure. Many people only make minimum payments and continue to spend. In a perfect world, all purchases made on a credit card would be paid in full each month. Doing so would mean that nothing would be paid in interest. But by making only the minimum payment, most of that bill goes toward interest and not the balance. When consumers do not pay the balances on their credit cards in full, therefore, it is not difficult to increase debt.
Credit cards should be viewed as a method of payment, not a loan to buy things that a consumer cannot otherwise afford. Balances should be paid in a timely manner. If you responsibly purchase with and pay off your balances on your credit cards, you will also be able to handle emergency expenses more readily than if you carried balances on your cards. Remember that the credit cards are in your name and you own the balances incurred on them.
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For more related to credit cards, visit www.getsmart.com/credit-cards.
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