The findings of its yearly survey of consumer credit card behaviors was just released by Consumer Reports. It found that 12 million people in this country still owe money from holiday spending from 2007. 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. When credit cards are used in this manner, it is tempting to let the balances ride and increase debt.
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. You can also settle disagreements over inferior products or services charged to your 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 ease of use and protection offered by credit cards make them a preferred payment method for many consumers. Credit cards can also seduce consumers into easily spending more than they should. 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 are a very practical and convenient resource, but should not be used to pay for unnecessary things that push consumers beyond their means. Payment schedules should be followed to avoid fees, and balances should be kept within responsible ranges. By keeping balances on credit cards in check, unexpected expenses for emergencies can be managed with ease. Only you are accountable for the balances you carry on your credit cards.
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