The Pitfalls of Credit Cards
We live in a social media age where people are continually trying to keep up appearances by buying the latest designer clothes, European cars and extravagant international holidays.
Largely because of this, at least in my opinion, I’ve noticed a worrying trend of excessive credit card debt amongst Gen Y.
Which brings me to today’s topic, that being, credit cards are bad news.
10 years ago it was harder to get a credit card but financial institutions are the best market researchers in the world and they’ve discovered that they can make money through them.
As such, they’ve infiltrated Gen Y to capitalise on our costly lifestyles.
How you ask?
Banks lure consumers in by offering them credit cards with more money than their monthly salary that have an interest-free term (e.g. 12 months).
Given that human nature is to always want more, they figure that consumers will continually spend money on their credit cards for the entirety of the interest-free period.
What banks fail to tell customers is that the interest rates on credit cards – once the interest-free term expires – can be as high as 30%.
It doesn’t take a genius to realise that when your debt is more than your monthly salary, making credit card repayments becomes virtually insurmountable.
If you’re already in this situation, I sympathise with you. Here are some tips that I encourage you to explore which should help you improve your overall financial position:
Firstly, chop up those credit cards. When you remove the ability to immediately access the funds, it becomes a hell of a lot harder to spend the money.
Secondly, look into getting a personal loan from the bank and use that money to pay off the credit cards at once. This way you can avoid making costly repayments at a high interest rate.
But the best way to help yourself is to not spend money on items you don’t need. Change your behavioural patterns by setting a goal and saving in order to make a purchase happen.
If you have any questions, leave them in the comments section below!
Ayda Shabanz xx