Question: Variety is the spice of life. That saying applies to a lot of things like food, travel, hobbies, etc. When it comes to credit cards, variety may be more like quicksand – initial choices and decisions may appear harmless at first but once you take a few misguided steps or an unplanned event sends you down the wrong path, you may quickly notice you are in trouble. What’s the best way to navigate the new world of credit cards?
There is no going back. Cash is no longer king – the credit card now rules! Credit cards were a novelty back in the 1960s when there were only a handful of companies that made them available. They were initially intended for commercial use so that companies could buy larger quantities of goods now and pay for them later. Someone then decided that it would be great if consumers could do the same.
Very few consumers used credit cards when they were first introduced. People had been raised to only buy what they could pay cash for. Having a mortgage on your home was about the only type of credit our grandparents were comfortable with. Retailers and service providers wanted to sell more and credit cards seemed to be the wave of the future. Banks quickly learned they could charge fees and interest and the credit card options exploded. Banks, retailers, oil companies, airlines, restaurants – everyone wanted a piece of the credit card pie.
Fast forward to 2016. The average person carries 4 credit cards in their wallet or on their smart phone. Whether you are shopping in stores, online or at the drive thru, you are likely paying for most of your purchases with a credit card. Both consumers and retailers have created an addiction to credit cards buy creating and feeding on a multitude of reward programs. The bottom line is that retailers and credit card issuers have a lot more to gain than consumers. Credit cards are now a multi-billion dollar industry. They are more convenient and allow consumers to impulse buy and spend much more than they would if they were buying with cash.
If you can afford to pay off your full balance every month and cash in on a no fee rewards program, you are on the right track. If on the other hand, you are carrying a balance at 19% interest or more, your cards are maxed out and you are paying the minimum payment or less every month, you need help. You likely have other debt as well. You should take a step back and find a solution while you still have some control of the situation. Your banker or a Licensed Insolvency Trustee are your best bet as they have the experience and can provide the advice you need. They will work through various scenarios and help develop a plan that fits your situation.
If you need help with your plan or are burdened with debt stress, asking for sound advice is a sign of strength and the smart thing to do. Asking sooner rather than later is always better. Call Doyle Salewski today for your free, no obligation consultation. You’ll be glad you did.