Credit Cards An Unnecessary Evil
Below is a MRR and PLR article in category Finance -> subcategory Other.
Credit Cards: An Unnecessary Evil
Summary:
Credit is easy to get but hard to escape. Learn how to take control and end your debt cycle. Find freedom from debt and embrace life!Why We Are in Debt
Why are many of us drowning in debt beyond our means? It seems everyone has some debt?"it’s almost a part of life. But why does it often match or exceed what we can afford?
The answer is simple. Credit card companies thrive on this system. They profit from our missteps, especially when we fall behind.
The Credit Card Trap
While everyone enjoys being paid on time, creditors have a different agenda. They actually prefer when payments are late!
Of course, they don’t want you so late that you default, but a week or two is perfect. Consider what a late payment means for them: You’re still paying, yet a late fee of $30 is incurred. If you’re maxed out, this can push you over the limit, adding another $30 fee. This is profit for them without any extra effort.
Here’s the math: if you have $15 in monthly interest, plus a $30 late fee and another $30 over-limit fee, that’s $75 added to your account. If you make a $20 payment, you’re actually $55 worse off with nothing to show for it.
This is why credit cards can be treacherous, and learning to live without them is vital!
Breaking Free
Start by gathering your credit cards and getting rid of most of them. Keep one or two with the lowest interest rates and store them in a safe, inaccessible place.
Though it may seem drastic, most people lack the willpower to resist using available credit as “free money.” But remember, there’s no such thing.
If you can’t bring yourself to cut them up, at least store them in a hard-to-reach location, like a safe deposit box. Consider entrusting them to someone reliable.
The goal is to avoid impulse purchases. Once the moment passes, you'll likely see that the purchase wasn’t necessary, or you’ll forget about it altogether. Every step like this brings you closer to financial freedom.
Cancel Unused Cards
Don’t forget to cancel the cards you no longer use. Annual fees ranging from $30 to $100 can otherwise drain your finances?"money better used to pay down your balance.
Some cards might charge a closed account fee to discourage cancellation. Evaluate this carefully. I recently canceled a card with a $3.50 monthly closed account fee. My annual fee was $59, so 12 months at $3.50 is $42. I’m still saving $17 per year, more if I pay it off sooner. Most importantly, I can’t worsen my debt by using that card.
Moving Forward
With temptation out of the way, focus on paying off your debts. Always pay at least the minimum on time and stop using credit. Then, step back and enjoy your journey to financial freedom.
You can find the original non-AI version of this article here: Credit Cards An Unnecessary Evil.
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