Be Careful With Your Credit Cards Before You Fall Into Bad Debt

This week, data revealed that more people are spending more on plastic. Credit card and loan borrowings rose by about $1 billion in September, the highest growth rate in seven months, government data showed.

The only way this can be explained is called "stress borrowing." And consumers are so strapped for cash that they are forced to pay for purchases like groceries and heating with credit cards. If this is true, it means that if they can't afford to pay for groceries now, they're likely to find themselves in a debt catastrophe as things get even worse next month. Not only will you receive a bill, but you will also have debt to repay and interest on it. September is back-to-school month, which increases retail sales, but it's also the month when all parents shop for school uniforms and essentials for their children. This year, most of the work was done on credit.

In fact, credit card debt has fallen significantly in recent years as people tend to reduce their use of expensive loans due to the economic downturn. In fact, credit card debt peaked in February 2006 and has steadily declined since then until September of last year. It's also worth noting that average interest rates on credit cards are rising. Nine years ago, the average interest rate was 13.9%. It now stands at 18.4 percent, an increase of nearly 50 percent. This is an average amount, so some people will pay much less, but many will charge much more.

Most credit cards are charged to people who can't afford them. A destitute family lives on the edge of the abyss and is forced to take out loans to support themselves. Some critics say people who take on so much debt are foolish. No one forced them into debt. However, as mentioned above, many people turn to plastic as a last resort. Not for pleasure, but for the necessities we need to survive.

Of course, for many people, a credit card is a convenience they can't live without. Many people use this for a month and pay all at once. Smart card users also secure cashback and rewards to get the most out of their spending.

But the danger with the easy availability of plastic is that when the going gets tough, people may turn to it to survive, as many already do. And that's the recipe for a fast-track debt disaster. With many people facing unemployment due to the deepening recession, it's time to ditch the plastic and stay away from temptation. Remember to be a smart consumer, stick to your budget, and have a repayment plan.

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