Responsible Spending with Credit Cards
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by: barrywaters
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Word Count: 558
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. Many consumers are turning to the use of credit cards, in the absence of once available loans and lines of credit. When credit cards are used in this manner, it is tempting to let the balances ride and increase debt.
There are many advantages to using a credit card, especially if you are making an expensive purchase. If you did not have a credit card, you would have to carry a large sum of cash or a checkbook. Credit cards come with some safety nets too. If someone fraudulently makes a purchase on your card, you usually are not on the hook for more than $50 of that purchase. It is also easier to dispute issues you may have with customer service or a product, if you paid via credit card. And the click and mortar internet retail sector would not be able to sustain itself without payments made via credit cards. Thanks to your credit cards, you can buy diapers online and have them on your doorstep within a day. You do not have to hassle with waiting to send a check or money order. An added bonus is that everything you buy with your credit cards can be easily monitored, itemized and put into budget tracking software. 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. It is all too easy to pay the minimum payments each month and keep increasing the balance. 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. By regularly paying only the minimum payments each month and continuing to make purchases on those credit cards, a consumer can easily get stuck in a cycle of debt.
Credit cards should be viewed as a method of payment, not a loan to buy things that a consumer cannot otherwise afford. Payment schedules should be followed to avoid fees, and balances should be kept within responsible ranges. If you responsibly purchase with and pay off your balances on your credit cards, you will also be able to handle emergency expenses more readily than if you carried balances on your cards. Remember that the credit cards are in your name and you own the balances incurred on them.
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Find more info regarding credit cards, read www.getsmart.com/credit-cards.
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