As the use of plastic money became popular, more and more people are using it while more business establishments are accepting it to complete transactions. However, credit cards have become a factor in burying people alive with debt-related problems so it is important for card holders to learn how to use it properly to avoid excessive credit card debt.
Bank cards offer customers convenience and countless benefits. With cards in their wallets, they can buy stuff they want without carrying cash with them most of the time. They can also avail of rebates, discounts and special offers. Purchases done online can be completed by a few clicks on the computer but with all these benefits comes the pitfalls of falling into debt when you do not use how to use your credit card.
But all these problems, with credit card debt in excess, can be prevented. The last hope you have is to learn from the experiences of the millions of people who are dealing with important debt problems. The use of plastic money in excess is always a serious matter.
Just because some card holders failed is no reason for card companies to shut off issuing cards to customers. They have a business to run and you as a card holder have certain responsibilities you must be aware of.
This problem, of credit card debt in excess can be seen from two points of view: from the perspective of the individual card holder and from the card issuers' point of view.
Usually, credit card companies must warn their clients about the huge debts even before issuing warnings about the credit limit. The credit companies can inform you about the ways you can protect the card, without pushing your limits too far.
But what we think they must do is to impose credit card use lessons to their clients, where they can teach them how exactly the system works, and thus, maybe the list will narrow down a bit. No matter what field you work in, or what the actions you take are, it is always better to prevent than cure.
But, in the end, the final decision belongs to the individual, the one carrying the card in his or her pocket. Theory is useless if people do not want to act according to the warnings and avoid the previous bad examples of overspending with the credit card. There are some people looking for trouble, and those people cannot be trained nor educated in any way. And, after all, debts mean spending money without thinking of consequences.
Credit card debt in excess can be avoided if there is effort from the part of the card issuer and the individual owner. The financial path is not made of roses. Where there are facilities there are disadvantages too.
In a study carried out by MoneyExpert, it was revealed that more than three-quarters (78 per cent) of people have at least one credit card. Just over a quarter (28 per cent) of adults have one card, with 24 per cent owning two. Meanwhile, three out of 100 people questioned say they have five cards, with an additional 1.8 million people claiming to have more than this amount. The price comparison website suggested many consumers have a number of credit cards due to running up large debts or attempting to transfer balances across accounts.
Meanwhile, citing the most recent figures from the British Bankers' Association, MoneyExpert revealed that some 30.4 billion pounds is owed via the form of borrowing.
Furthermore, problems with repaying money owed across a variety of credit cards may extend to difficulties in meeting other borrowing commitments such as loans, overdrafts and store cards. In addition, people may discover that they struggle to make payments on other financial demands, for example utility bills and transport costs.
It was also revealed that 28 per cent of consumers applied for more credit cards over the course of 2007. While the majority of such borrowers were looking to get one more, just over a quarter of these people plan to get two or three borrowing products.
Additionally, the survey indicated that middle-aged people are likely to have the most credit cards. Some seven per cent of Britons in this age group state that they have more than five cards. Meanwhile, seven per cent of Londoners have over five plastic cards. However, among those living in Scotland this proportion falls to one per cent.
Commenting on the figures, Sean Gardner, chief executive of MoneyExpert, said: "The credit crunch hasn't finished the British love affair with credit cards yet, with millions of us still holding five or more cards. That is entirely healthy if people are swapping debts from one card to another taking advantage of zero per cent deals to ensure that that they pay as little interest as possible. However, there has to be real concern if people are using cards to keep their head above water. Anyone who is trying to juggle five or more credit cards and owes money on all of them is in real trouble."
He added that as the period when credit was usually easy to come by is "long gone", consumers should look to be proactive in getting to grips with their debts.
For those looking to get their money management under control, taking out a cheap debt consolidation loan might be advisable. Such a loan could help borrowers to converge a number of financial demands into a single low-cost monthly repayment. This might be of particular help to people struggling with multiple credit card debts.
In research conducted by MoneyExpert earlier this year, it was revealed that 5.9 million Britons changed credit card deals during the second half of last year in an attempt to reduce financial pressures. Some 17 per cent of 25 to 34-year-olds have switched provider so as to get to grips with their spending.
Both David Smythe & Tom Dawson are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
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