How Credit Cards Can Negatively Affect Your Financial Stability
Credit cards can be a great tool to help you manage your money, but they’re also one of the contributing reasons people end up filing, either a consumer proposal or bankruptcy. We’re not saying that if you have a credit card you should throw it away. In today’s consumer society it is difficult not to have a credit card. If you find yourself in over your head with credit card debt, it’s time to take action.
Here’s how credit cards can negatively affect your financial stability:
The interest charged can add up quickly: When you make a purchase with a credit card and do not pay it off by the due date, interest will commence to be charged. Depending on the credit card, the interest rate can be upwards of 30%. This means that if you only make the minimum payment each month, it will take years to pay off the entire balance. If you have more than one credit card, and those too are in arrears, then the situation is compounded.
You may not know where you are in terms of what you have charged: It is easy to lose track of what you have charged on a credit card unless you are diligent in monitoring your spending. Since you don’t see the cash leaving your pocket when you use a credit card, it’s easy to forget how much money is being charged and hence committing your future resources to pay for those charges. This emphasizes the importance of creating a budget and a spending plan, so that your credit purchases do not get out of hand.
The more credit cards you have, the less you can borrow: If you think of credit as being a pie, everytime you get another credit card, you commit a slice of that pie for the credit that you have acquired. The more credit cards you have the more slices of pie you commit and therefore the less borrowing power you will have for future borrowings.
Dealing with debt is stressful and can affect other aspects of your life. There are ways to deal with these debts and put you back on the road to a financial fresh start. The journey begins with booking your free non-judgmental consultation today with JW Weber & Associates Inc. by visiting us at correctthedebts.com or calling 403-836-6690.