Building a Healthy Financial Life as a Single Parent
June 3, 2022
Debunking Myths on Debt Consolidation – Does It Harm Credit Scores
June 27, 2022
It’s so easy to get into credit card debt, which is why it’s one of the most treacherous debts out there. Unbeknownst to some, there’s a thing called good debt, but the one from credit cards isn’t, especially if it’s not paid in full every month.
Have Bigger Interest Rates to Pay
Credit cards have the highest APRs, while education, mortgage, and personal loans usually have lower interest rates in the mid-single digits. Credit cards are so tempting, especially with their generous rewards programs, that it’s easy to get carried away and rack up a hefty bill, which is why they should never be used unless they can be paid off at the end of the month. However, the inability to pay the entire balance will result in high-interest rates and more debt.
The Minimum Payments Will Take Years to Pay in Full
The minimum payments on a credit card bill are the bare minimum one can pay to avoid penalty fees. However, paying only the minimum is basically telling the lender that it’s okay to pay a big chunk of interest for a long time.
It’s Not Used to Buy Appreciating Assets
It is known that money has to work for you. The money invested in retirement accounts is growing, and so are other assets bought with money saved in the past. However, when money is put into credit card debt, it will not grow. It’ll just cost more in the long run, which will end up in high-interest rates.
It’s Dangerous
Credit cards make purchases more accessible, but they’re dangerous when there’s no proper spending control. It’s easy to get a credit card, and there’s no waiting period to make purchases. The money on a credit card is immediately available, which is why it’s easy to make unplanned purchases. However, staying out of credit card trouble is as simple as learning not to make unplanned purchases and to stick to a budget.
It is Only About Paying Interest on Frills
It doesn’t have to be this way. One can still have a credit card for its perks, like rewards, and use it only for big purchases that can be paid off in full. For those who already have credit card debt, get it paid off as soon as possible. The payment should cover the interest and make a dent in the principal. Remember, the longer the debt is there, the bigger the debt will be.
Stay Out of Credit Card Debt
Credit card debt is a burden that’s easy to get into. However, the good news is it can be resolved. All it takes is understanding the dangers of having credit card debt.
Getting a good handle on their finances will help individuals avoid this situation in the future. A free credit report is a good idea to check for errors and ask for a free credit score. In the end, getting a good handle on credit always pays off.
DebtHelpers.ca offers customized debt solutions for all Canadians with credit card debt. Our wide range of consulting services and debt solutions help reach our clients’ goals of becoming debt-free. Get in touch with us.