If every American could internalize a few important facts about credit cards and act on that knowledge, the majority of our nation’s credit card debt problems could be eliminated. If you have a credit card, which you likely do if you are an adult, you should keep the following facts in mind in order to avoid getting into a debt problem.
You should know that credit card debt is an unsecured liability that creditors incur after borrowing money as a loan from “a short-term revolving loan facility.” As such, whenever you make a purchase on a credit card it is important to remember that you are taking out a loan. Furthermore, you need to remember that this loan probably has some of the worst lending terms you can find.
Although there will be a grace period on a credit card purchase, and interest will not be incurred until after that grace period has passed, the grace period generally only lasts as long as the credit card’s monthly billing period. Some cards also offer a six-month or year-long grace period on interest in some cases. If you pay down your credit card debt to zero every month, you will not suffer an interest charge, so it is always best to do that.
Credit card users who carry a balance on their cards are the ones who will suffer from steep interest charges. The more money you borrow on a credit card, the more interest you will be charged and this is how debt can snowball fast and become unmanageable.
The high interest rates are associated with credit card debt. This debt is one of the worst kinds of debt that anyone can have. If you are currently suffering from debt problems and unable to pay your monthly living expenses without charging more money on your credit cards, you may want to consider speaking with a credit card debt attorney or bankruptcy attorney who can assist you in getting out of debt as fast as possible.
Source: Investopedia, “Credit Card Debt,” accessed April 15, 2016