Credit Cards Are Good For People With Plenty Of Money but credit cards can be very bad for people who are short of money. The reason is simple and it explains why you should learn how to use credit cards with care. Credit cards offer a very useful fast credit facility so any time you are short of the cash to pay for something a credit card can be the solution to your cashflow problems.
If you have lots of money coming into your household regularly then maybe the next month you can pay off a very large part, if not all, of the credit card debt. The credit card has helped you overcome a short term financial difficulty.
If you don’t have lots of money coming in each month you may just pay the minimum repayment and you will get billed for a big interest charge. The following month when you make your minimum payment nearly all of that payment will go to paying the interest charge and the amount you reduce the debt by will be tiny.
So it goes on. Month after month you make you payments and month after month nearly all the money goes in paying interest charges. You end up spending many times the original debt.
If the rich man and the poor man both buy the same product on a credit card the rich man is likely to pay much less over the long term than the poor man. It may go against everything we think would be fair but it is a fact. If you cannot afford to repay credit card debt quickly it will cost you a small fortune.
So what can you do about this problem? The obvious answer is to avoid using credit cards unless you are sure you can repay the debt quickly. It may not be so easy to do but if you ever want to be clear of debt then you must try.
Change your lifestyle so you spend less of your income on unimportant things and use the money to get control of your debts. We all have credit card debt problems but the less well off have a bigger problem and it costs them more money to use credit cards.
Use credit cards wisely and they are a great financial tool but if you use them for long term debt they will cripple you with high interest charges and maybe fees.
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