CREDIT CARDS – THE GOOD THE BAD THE UGLY
Credit cards are likely the most significant financial services innovation of the last century. Credit cards allow “regular people” ready access to borrowed money; when they first hit the consumer banking scene in the 1950s, they were a revolution.
Borrowing money of course, is nothing new. As long as money has existed as a means to exchange services, those that had it were keen to lend it to those that did not – but for a profit. Credit cards simplified this process and have launched a headlong rush into consumer debt ever since.
So, are credit cards good?
For many people, the convenience of access to instant credit simplifies business transactions and helps to smooth out the bumps in cash-flow. For unforeseen emergencies, access to instant credit can turn a crisis into a manageable problem. For reducing risk of loss by nearly eliminating the need to carry large amounts of cash while traveling, they are invaluable. And today, for making online purchases for goods and services they are critical.
But, remember… at the end of the month, the bill has to be paid.
So, are credit cards bad?
In a word – no. Used properly and carefully managed, credit cards are an important part of modern participation in the economy. They enable the sale of goods and services and provide security for transactions that otherwise would result in large amounts of cash changing hands. For online commerce, they are almost a must. Today it’s nearly impossible to get along without credit cards.
So when do things get ugly?
We run into trouble with credit cards when we start carrying balances on cards. Credit cards were never intended for long term financing, neither are they an inexpensive way to borrow money. Even the lowest interest card charges two to three times more than in any other money lending manner. Normal credit cards are offering rates of five times and some as much as ten times more. If you are relying on credit cards to finance basic expenses and have to carry those balances long term, it’s going to get ugly fast if you’re only able to make minimum payments. You will soon find yourself struggling under that debt as the interest monster will consume more and more of your income just to carry the debt.
If the “Interest Monster” has made your finances a mess, you may very well need some help to get back on track. We can help you make a plan that puts you in the driver’s seat and ultimately debt-free.
Call 310-PLAN or go online at www.hoyes.com and let’s get started.
