Credit Cards

(Part 2)

 

Unfortunately, this will lead to building up a mountain of credit card debt or bad credit history and could result in a person filing a bankruptcy. According to the Nilson Report, February 2010, the average credit card debt per household with credit card debt is $15,788 and the number of credit cards held per family is 3.5. Moreover, credit card statistics, industry facts, and debt statistics states total bankruptcy filings in 2009 reached 1.4 million in 2009, up from 1.09 million in 2008.

Furthermore, many Americas that use credit cards are usually paying more for their purchases in the end because of the financing costs and interest accrued from the purchases that people make. Credit card companies and banks are making more money off people because of the interest, additional fees, and penalties that credit cards have because of people overspending and not able to pay their bills on time. Even when a credit card issuer offers zero-interest financing, you can be sure that they are making money on fees some kind of way or another. Credit card agreements are written on average at a 12th grade-reading level, making them not understandable to four out of five adults, according to a CreditCards.com analysis of all the agreements offered by major card issuers in the United States. If a person cannot understand the agreement, he or she does not know what is charged in fees. Often when people start making late payments, these fees and interest start to pile up making it more difficult for most Americans to keep up, and it will lead to poor credit ratings and higher interest rates. Poor credit ratings and higher interest rates will give banks and other credit card issuers valid reasons to make more profit off people, so the cost of what people buy increases without them realizing it.

Credit card companies reduce the privacy of your financial information because your credit card provider may sell your credit and financial information to other companies that want to solicit you. Identity theft is the nation’s fastest-growing crime in most cases involving credit cards. Fraudulent credit card charges often involve online or telephone orders because it is easier to use someone else’s identity in a venue where no additional identification, such as a driver’s license with a picture, is required. Your credit may be damaged, and it takes time and effort to correct this. If your credit card issuer thinks that you have been the victim of fraud, they temporarily put a hold on the card, disallowing any credit purchases until the issue has been resolved.

In the end, responsible use of a credit card does not exist. Credit card debt is a major problem in America; therefore, there is no positive side to credit card use. You will spend more if you use credit cards. Even by paying the bills on time, you are not beating the system! However, most Americans do not pay on time. In addition, you put yourself at risk of identity theft when owning a credit card. Your personal identity and your personal information will expose you to lose personal privacy. Personal finance is 80% behavior. You need to cut out habits that make you spend more. You do not build wealth with credit cards. Use common sense. When you play with a multi-billion dollar industry and you think you will win at their game, you are naive. You cannot beat the credit card companies.

 

References

 

Prater, C. (2010, July 22). U.S. credit card agreements unreadable to 4 out of 5 adults.

Rogak, L. (2011, September). 10 things you should know about identity theft.

THE NILSON REPORT. (2010, December). THE NILSON REPORT.

Woosley, B., & Schulz, M. (2010, July 14). Credit card statistics, industry facts, debt statistics.

 

 

Credit Cards