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Borrowing Tomorrow
by Jack Wellman
2008-01-06 09:51:00 |
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What kind of nation relies on debtedness more than the United States? With China financing a war in the Middle East and the U.S. sliding ever further down the bottomless pit of possible repayment, now its own citizens are following suit. In the U.S. (latest statistics, 2005), private debt related to credit cards alone, was over three quarters of a trillion dollars ($753 billion), while the United Kingdom’s citizen’s had over 55 billion pounds of debt…Austria topped 50 billion dollars. And the trend is growing exponentially.
Credit cards are a necessary evil. It is good to have one for emergencies, but all too often it becomes a second wallet or billfold. The credit card companies can raise your rates if you don’t use them at least monthly and late fees, changing interest rates, late penalties, etc., can escalate the card’s debt. All the while, the customer is in the dark until they receive the bill.
Further harm comes when people get in trouble with repayments and simply take one credit card debt and transfer it to another or a new one…all the while tending to a growing list of cards. The average American consumer already carries 13 credit cards, while 60% have at least several (3-10), one in four have over 20! And unbeknownst to the client, with each card added, their credit rating goes down.
The only thing easy about credit is how easily credit card companies make money…and how easily people sign up for them. Interest rates can change over night and can easily double and triple for not making a payment or not making a purchase within a calendar month. This could be part of the reason that card holder’s spend 43% more than those who pay only with cash.
New bankruptcy laws have made it much more difficult to walk away from enormous debts and cancel huge credit card debts. Many college graduates start out life in debt of as much as 40 thousand dollars. This is by no means universal. For example Germany had no such designations of bankruptcy in their laws until the mid 2000‘s, since credit card debt was extremely uncommon.
Credit cards are established with a revolving payment plan designed to keep consumers in credit card debt and are not offered with strict underwriting guidelines. They make their own rules, even though Congress has talked about credit reform. However this is aimed more toward home mortgage foreclosures. But there is help available. Google any non-profit debt re-organizer or counsellor and you can get excellent help in managing your debt or consolidate it into one, simple payment. There is no reason you have to drown in debt when there are so many reputable lifelines available.
It’s like we’re holding tomorrow hostage for the conveniences of today. We are mortgaging tomorrow for today. Card companies say "enjoy now and pay later", but procrastination can be financially dangerous. And it is already doing serious harm to the economy. Credit cards are not necessarily bad. They do not cause bankruptcy and debt. They can be a lifesaver in an emergency. But they can also be your worst enemy. One to three cards are all that are necessary. Sadly our culture makes it hard to do many things without a credit card (like rent a car). And that is part of the problem. Part of the solution is sticking with one or two cards and keeping them only for emergency or for allowable expenses, like utilities. If you can do that, it’s a real credit to you. No debt about it.
credit-card money Finance |
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