By Paul Duxbury,
On-line Entrepreneur


pkmcr[at]pk-ebooks.co.uk
http://www.sort-your-finances.com

Credit cards continue to multiply and it sometimes seems like a day doesn’t go by without another amazing offer dropping through the letter box! They can seem very attractive at times because they are so convenient to use. There’s no need to carry any money with you ever again if you believe the hype. They enable you to go shopping without having to carry money with you and you can pay the exact amount just by handing it over. If you haven’t been paid yet, then you don’t need to worry, because the money will still be there.

When you shop on the Internet or over the phone, it’s the only good way to do it because on the whole it’s very secure and what else are you going to do, post a cheque or send a money or postal order and then wait for it to be received and in the case of a cheque cleared by your bankers?

However, like anything convenient credit cards do have a flip side – in fact, they have lots.

Can You Keep Track?

When you walk into that shop and hand over the card, the money is taken from the card, and the card goes back into your wallet. You still have all the things you started with – there’s no less money in your purse or wallet to remind you of what you’ve spent other than the receipt tucked into your wallet or more usually popped into the bag with your purchases.

It’s a common truth that everyone has a tendency to underestimate what they spend. It’s also very true that smaller amounts can add up quickly on a credit card without you even noticing. If you think about it in terms of the way phone bills work and then apply it to everything you buy on your credit cards – well it doesn’t bear thinking about does it!

You are paying money for nothing.

Using credit cards has to be one of the best ways of losing a percentage of your income to a credit card company in exchange for nothing. The moment you start to build up any balance on your credit card you are paying the Credit Card Company interest. Not only that, but generally speaking we all try to pay our credit card bills as soon as we receive our salary or wages, so you don’t even get the chance to earn any interest on the monies going into the bank. When you think about it, you’re losing out twice over!

Designed to keep you in debt.

Your credit cards are trying to keep you using them and paying interest. You will find it very difficult to pay off all your credit cards once you have them. The company will do everything they can to stop you paying before you’ve paid them lots of interest. The more debt you show you can pay back, the more they’ll try to offer you, until they get you to the point where you can’t pay and then they start getting nasty and adding fees for this and that. There are so many Credit Card Companies today who seem to take little responsibility for the fact that they have encouraged people to get further and further into debt. They argue that it was the Credit Card holder who spent the money not them that kept increasing the available Credit limit.

The Lie in the Name.

Credit cards are called credit cards to avoid saying what they really are and that is debt! It’s quite a clever trick isn’t it because “Credit” sounds good and as if we have money in the bank! To be in Credit is always portrayed as a good thing however when thinking about Credit Cards you will do much better if you always remember this simple saying: “credit cards are debt cards”. Use the word debt as often as you can whenever you talk about credit cards to remind yourself that every time you use one you are creating a debt for yourself!

But Sometimes You Can’t Avoid Them. When you need money in an emergency and you just don’t have any, there’s no doubting that credit cards can be useful. They are also a very useful way of proving to credit rating agencies that you can handle debt, and this will be taken into consideration when you apply for car loans or a mortgage.

Just remember that whenever you handle credit cards, you’re playing with fire. Do everything you can to keep your use of them to a minimum, and you’ll have a much better financial life.

Paul Duxbury is a successful online entrepreneur and was previouslya Corporate Banker. His new site at www.sort-your-finances.com addresses the problems caused by Credit Cards and provides helpful free advice.

Published - January 2006