Although the introduction of credit cards was meant to help people achieve more financial freedom, entrepreneur Renaud Laplanche says that there are several unfortunate situations that are associated with it. For instance, he points out that most households in the United States are in debt because of these credit facilities. In addition to that, he says that many people are in more difficult situations because of this. However, it is all because most users do not know how to handle these cards and the features that come with them. Here is a look at the things that might make your cards your worst enemy.
A Debt Cycle That Does Not End
The fact that you can pay for your expenses even when you do not have money one your card has led many people to end up in an endless cycle of expenses. You will notice that most people accumulate debt on their cards, pay, and start accumulating even more. At the end of the day, the card becomes nothing more than an avenue of borrowing and paying. The worst part is that a majority of card holders end up accumulating more debt than they can pay, and that is bow they end up in bad credit books.
The rates that you pay on your credit card can make you feel as if your u are being ripped off. You will notice that some companies have a long list of charges, and this makes the situation more difficult. If you have to pay high interest rates on the debts that you accumulate through these cards, it only means that you are borrowing from the wrong company. The problem is that most users are blinded by the possibility of paging for bills with these cards that they do not care about the rates. In addition to that, most of their credit card expenditures go to things that they hardly need or budget for.
Most credit card companies have reward programs to entice people to spend more using their cards. They want to be ensure that you keep spending, and to achieve that, they will have several promotional programs. The problem is that even when you get these rewards, you will have spent even more than you should. You will notice when it is already too late that you have been spending money on things that you can do without just because you are chasing these incentives. By that time, you probably will be having a huge debt on your card, and the same company will be on your neck.
Renaud Laplanche says that poor handling of credit cards is the reason most people have a poor credit score, and that are likely to be in the same situation for longer because their debt keeps accumulating. If only people knew how to properly handle their cards, they would be in a better situation. It is all about knowing when to use your cards and how to keep them fees and interest rates low.