Do You Have Unhealthy Credit Card Debt?
Most of us find the need for credit cards every now and then. However the ability to overspend can put your finances in danger.
The most attractive aspect of credit cards is purchasing power. Credit cards allow you to purchase anything at any time, locally, worldwide or online. If you do not have the money to purchase the items you want, simply pay later by swiping your credit card
Credit cards can be a real life saver when it comes to emergency finances, for example those unexpected car repairs! When these unavoidable costs arise, draining your bank account is not always a good idea; credit cards can be a convenient option.
However, it is the purchasing power of credit cards that poses a huge threat to your finances! It is very common for credit card users to spiral out of control with credit card debt.
Is your credit card use becoming unhealthy?There are a number of signs that may suggest you are spending more than you can afford. For instance, impulse credit card purchases; if you are using your credit card to buy new shoes and handbags you are heading towards unhealthy credit card debt.
Paying the full amount back rarely occurs due to the alternative of paying it in small instalments, with high interest rates. So really, you are paying close to double the amount for an item that you don’t really ‘need’, compared to what you would have paid in cash. Where is the logic in that?
Another sign of unhealthy credit card use is struggling to repay your debt. Debt payments should be of high priority in your budget and never left till last i.e. pay your debts before you go on those lunch dates! If you are falling behind on payments you may need to give up some of your leisurely activities. If you still cannot afford to repay your debt, then you know you are in over your head.
Lastly and most obviously, if you have maxed out your credit card/multiple credit cards then you are most likely in unhealthy credit card debt. You should always pay off existing debts before you top up your credit card. Maxing out credit cards will damage your credit score and land you in a sinking hole of debt with soaring interest rates.
If you are struggling with large amounts of credit card debt, work out a repayment plan with your provider and plan a strict but achievable budget using a helpful budgeting tool. Do not use your credit card until your existing debt is repaid. In future, limit your credit card use for emergencies or ‘needs’ rather than ‘wants’.