Do You Love Your Plastic?

    I love to shop for my kids, my husband, and myself; however, I cannot always afford to spend money directly from my checking account. When this situation occurs, I use my credit card to purchase the items that I want. Millions of people use credit cards to buy miscellaneous items and pay a specific monthly payment on their credit cards. Credit cards are very popular among people in the United States, but some people overspend and cannot manage their credit cards properly. Some people end up spending the maximum limit on their credit cards, which creates an even higher amount of debt and can result in lowered credit scores, hassle from debit collectors, and even filing bankruptcy.   

     Can you believe in 2008, it was reported that approximately 176.8 million people owned credit cards? Also, the average credit cardholder owns at least three different credit cards. The top ten credit card companies in regards to customer satisfaction are American Express, Discover, US Bank, Wells Fargo, Chase, Barclaycard, Bank of America, Capital One, Citi, and HSBC. The average American carries approximately $3500 in revolving debt. Revolving debt is mainly acquired through the use of credit cards. Also, the average American household has approximately $7500 in revolving debt. It has been reported that the amount of debt either an individual or household carries has decreased significantly since the economic downturn in 2009, but credit card usage remains to prevail. The use of credit cards is not necessarily bad, but one must take precautions when making purchases on their credit cards. I know I personally have two credit cards. It is very hard to limit the amount of money I put on my credit cards, but I must watch the balance because it affects the amount of interest applied to my bill, which increases my monthly payment.

     Moreover, interest rates can greatly affect a person’s use of their credit cards. The annual percentage rate, commonly known as APR, is a fee that one will pay as a result of the ability to spend money on their credit cards. The national average APR ranges from 14% to 28%. Outrageous, right? Interest rates can lead to higher payments and over-the-limit charges, which can quickly get out of control. To avoid interest rates, a person would need to pay off the statement balance on their credit cards before the billing due date. I know this is easier said than done, but it is a good guideline to follow. Also, if one is late in making their payment, another fee will be applied to their credit cards. All these various fees can add up rapidly and can exceed the amount of purchases if the amount is not kept under control.

     Overall, I do not feel that credit cards are bad because they are useful in case of emergencies or times of hardship. However, I do firmly believe it is greatly important to closely watch your spending and the balance on your credit cards. Credit card usage is not for everyone, but they are convenient. If used properly, credit cards can raise credit scores and help a person learn to manage their financial budget. I strongly recommend at least owning one credit card to every person. They can help, but you must remember the guidelines. Remember; do not spend without thinking about the consequences.