How Credit Card Debt Really Affects Us

Although most of us know that credit card debt is one of the worst debts to have because it is notoriously hard to get out of, we still find ourselves using these cards because of the fact that they are so tempting.  They are very convenient to use and because we don’t physically have to hand over the cash we often use them for things we don’t really need.  Credit cards are also very handy when purchasing things online.  They are great to have provided they are used properly.  However, the problem is that most of us just don’t use them as they should be used and it is all too easy to find ourselves in debt before we even realise it.  So how does credit card debt really affect us?

• If you are only paying off the minimum payment on your credit card and are not making any more purchases, you could still find that it takes years to pay off the debt.  You could find yourself paying nearly three times the balance back in interest and over a period of about thirty years!  This is astonishing but most people are not aware of it.  When you pay only the minimum payment, you are paying mostly interest so while your payment looks very low and affordable, you are never going to make a serious dent in the amount that you have borrowed.  It is important that you read your credit card statements every month to see how much interest you are paying and how this compares to your minimum payment.  If you have extra money to spare every month, then you should try to pay more on your credit cards.
• Unless you can afford to pay off what you spend on your credit card at the end of every month, you should avoid buying on your credit card so that you can give yourself a chance to reduce your payments.  You may have heard that it is best to pay off your highest interest credit card first but it may be better to concentrate on the credit card that has the lowest balance instead.  That way, you can get this paid off in a quicker time and then once it has been paid, you can use that payment and apply it to your next card.  This is a great way to get your cards paid off in the quickest possible time frame.  In order for this to work however, you must make sure that you stop using your credit cards for purchases.