It amazing to think that there are so many different opinions about credit cards. I have spoken to so many different people and heard so many different things both good and bad. I Previously was an avid hater of the plastic debt machine but in more recent times have changed my opinion.
Well for starters its money that the bank gives you to spend now and pay later. Say if you bought a laptop (like the one I am typing on now) for $400 at the start of the month and made no other purchases. The bill or statement for that month would be $400. If that card has a 55 days interest-free period, you don’t need to pay for your laptop for 55 days.
Essentially you get the benefit of buying now and saving up to pay it back later. Great isn’t it!
The Bad and Ugly:
Credit cards can be addictive. I have seen many people including myself fall victim to thinking that you can just buy everything now and pay later. It’s more common than you think for young people to stack up $5,000, $10,000 or $20,000 in credit card debt. In fact, I have heard stories of young people building accumulating up up to $60,000 debt on credit cards and then finding that the crippling interest payments are just too hard to handle. If you find this happens to you take action to consolidate your debts and start managing them. Check out this article 8 ways to avoid drowning in credit card debt.
Despite how scary that can sound it may not be as bad as you think. Managing credit cards is a discipline that not everyone can do. On two occasions, I have had to cut maxed out cards up and to avoid further spending.
Still I am a fan of credit cards, for those who can manage it they allow a smoothing of the peaks and troughs of expenses so you can manage your money and afford what you need when you need it instead of waiting.
Would love to know what your thoughts on credit cards! Leave a comment and tell us what you think.