The dangers of using credit cards in a recession
Avoid paying for your toys with credit cards. Pay in cash or with money that you have. You may forgo the credit card points for you to potentially redeem some stuff later on but you need to avoid chalking up more credit card expenditures in these hard times.
The last thing you want to happen is to get into credit card debt now, which can snowball exponentially if you miss paying in full for just one month. That’s how the banks earn more unnecessary income from you.
The credit card has long been packaged and marketed by banks as a prestige item where the holders are lead to believe that owning credit cards makes them feel high class and ‘rich’. To top it all, credit cards have different types to differentiate the super high class holders from the rest. Not to mention, using a credit card at most merchant outlets these days is super convenient.
Furthermore, most credit cards give the holders credit limits that are about twice (or more) their monthly incomes. Most holders also own multiple credit cards with similar credit limits. That is a personal financial disaster in the making because using credit cards encourage the holders to spend way more than they earn, which is absurd if you think of your personal finance like a business.
From the banks’ perspective, the role of a credit card is to entice holders to spend beyond their means by ‘playing’ on their desires to enjoy the finer things in life like the rich people. Hopefully when the holders can’t pay in full and just pay the minimum each month, the credit card debt trap is sprung and the horrendous compound interest rates take effect. In short, that defaulting credit card holder is ‘financially doomed’.
Hence be aware of the financial implications you are getting yourself into right now, not just in toy collecting, but also in the rest of your purchases as well. Don’t fall into the credit card trap. If you already have, then you better focus all your attention now to paying it off in full before you buy anything else. Good luck to you on that.
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Yes, pretty agree with you..Nowadays more convenient we pay and thence owing more debts..Sometimes, have to take a break before continuing in buying thing that you might not want.. It’s just for the sake of buying or because the item got a lot of discounts..Have to save money as much as possible to prepare for the worst scenario..
Bottomline is: consider carefully before making any impulsive toy purchases, for cash is king now
[...] Yesterday, I blogged about the dangers of using credit cards to pay for your purchases during this economic crisis. Today I shall elaborate more about budgeting and paying for your purchases in cash instead. [...]