Want To Stay Out Of Debt? Reasons You Should Stay Away From Credit Cards

Thursday, August 14, 2014, 1:00 AM | Leave Comment

It’s easy to fall into the trap of credit card debt. They provide a level of convenience that is hard to pass up, especially when you need just a little extra to get by. However, there are several reasons some people may want to avoid credit cards due to their potential to create financial hardships.

  • Universal Default

    The fine print on credit card agreements reads that they maintain the right to raise your interest rate at any time. For some credit card companies, all you have to do to incur a rise in interest is to make a late payment on any bill. It doesn’t even have to be your credit card bill; a late payment to the electric company can result in an increased interest rate. This is referred to as universal default.

  • Hidden Fees

    Just like the banks, credit card companies make the bulk of their money by charging fees. Many of these fees are incurred through rules that the owner of the credit card is unaware of. For example, most people know that a late payment will result in a fee. However, you can also be charged extra for using your card internationally or transferring balances.

  • Deceptive Minimum Payments

    Many credit card companies only charge a small fee for their monthly minimum payment. Those who do not check their account statements regularly assume that this payment stays small because their spending is in check. This is not the case. Credit card companies keep these minimum payments low so that the loan is extended as long as possible so that they can continue to collect interest. Paddon & Yorke Inc., a company helping people with bad credit in Toronto, encourages people to thoroughly go over their account statements every month to stay aware of their accumulated debt.

  • Increased Spending

    While most people have only the best intentions when opening their first credit card (“only for emergencies”), the convenience factor tends to tempt people into overspending. It’s easy to fall into the convenience trap that credit card companies make so attractive. Avoiding credit cards altogether keeps you spending only the money that you have at hand.

Credit card debt can create a hole that can seem impossible to get out of. Avoid credit cards to keep your spending in check. Debt experts will often deter you from opening up multiple credit cards, but for those who know they are likely to overspend, complete avoidance is the better option.

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