Danger of credit cards

Lauren Fry

Professor Celina Paquette

English 1301

March 5, 2013

 

The Danger of Credit Cards

            Credit cards should be banished.  I believe this because they are a ridiculous way to put you in debt.  Most people do not read into the fine print that comes along with that little plastic card.  Credit card companies are well known for targeting a younger group of people in their late teens to early twenties, and once that person applies and gets approved the problems start from that point on.  Today it is very common for a person with little to no credit to get approved for a credit card, and they do not realize that it can ruin your credit for a very long time.  I know from personal experience that credit cards are dangerous and would like to share with everyone that rather than opening that envelope, rip it up and throw it out of the window.

Credit cards may come by as a simple way to make a purchase, but if you do not have the cash to buy it, you do not absolutely need it.  This is a perfect example of why young people are targeted, I was 18 when I received my first credit card and to this day I wish I would have never opened that envelope.  Let’s say you go shopping to buy clothes or household items, it seems reasonable to charge it right?  This is not the case; do you even factor in the interest rates that will be charged or the late fees that could possibly accumulate overtime?  According to a statement made by a credit and debt management writer “missing credit card payments might not seem like a big deal to you, but your creditors don’t feel the same way” (Irby).  There can be severe penalties when making a late payment on your credit card.   You can accrue up to a $35 charge just for not making a payment on time or even an over the limit fee if your card is already maxed out.  And a late payment can be late even if it is an hour after it is due, so is it really worth paying that extra money?  It’s simple if you really need something just pay cash instead of pulling that plastic card out.

Unfortunately, it is too easy to make a purchase with a credit card.  You do not have to pay for anything right away; you can put it off for the next month.  But what happens when you do not have the money to make that payment?  Wikipedia states that “the results of not paying this debt on time are that the company will charge a late payment penalty (generally in the US from $10 to $40) and report the late payment to credit rating agencies.”  This can be the beginning of affecting your credit.  Your credit score is based on how efficiently you make payments and is a direct representation of your creditworthiness.  These are very important concepts to keep in mind for your future.  You might not think so when you are 18 or 19 years old, but ten years later when you want to purchase your first home or go buy a new car, the bank can deny you.  This can all stem from not having good credit and putting yourself into debt from using credit cards.

Another issue with credit cards is the interest rate.  Sometimes you can get 0% or a very low rate, but that is only if you have excellent credit.  If your credit is bad you can have an interest rate of up to 20%.  This can tack on a lot of extra cost when you are making minimum monthly payments.  The amount you owe on a credit card can go up in the blink of an eye because of such high interest rates.  This is a reason why people get so behind on their monthly payments, the amount owed can go up due to those rates and/or because of late fees.  Once you start missing payments your balance continues to grow and double, eventually you get so buried in debt that you cannot afford to even make that minimum payment.  The author of Borrowing to Make Ends Meet states “from 1989 to 2004, the percentage of cardholders incurring fees due to late payments of 60 days or more increased from 4.8 percent to 8.0 percent” (Garcia).  That rate rose almost 4% and that was almost ten years ago.  The credit card companies are out to make money off of everyone that has one and they will continue to keep people in debt for many years.

Debt is a horrible situation to be in.  A statistics expert states “the average college graduate has nearly $20,000 in debt; average credit card debt has increased 47 percent between 1989 and 2004 for 25-to 34-year-olds and 11 percent for 18- to 24-year-olds” (Draut).  This is an extremely high amount of debt, especially when you are graduated from college and on your way to a new career.  When you are in debt it is hard to get approved for many things; a car, home, or even a personal loan for an emergency.  Creditors will look at your debt to ratio and if you have too much revolving debt, they are not going to want to lend you any money.  And if you happen to be unemployed for several months, you will fall behind on payments and that will leave you in more debt.  This is why so many young people are subjected to credit cards; they do not have a mind set to budget money.  They just think of buying and buying; the consequences just do not sink in.  There are many young people that are responsible, but there are those that just do not understand what this can do to their future.  In some cases this can be a good way to learn to budget your finances, but it is not the greatest way.

I cannot stress enough on the dangers that credit cards can have on you, they are a great way for banks to drain you dry.  Just really think and read before you decide to take the risk of having a credit card.  Be sure to think about the interest rates you might have to pay, the late fees that can be tacked on, and the debt it can possibly put you in.  If you really need that new handbag or pair of shoes, wait until you have the money for it.  It is really not worth paying high interest on something that you could save your money for.  So next time you get that notice in the mail stating “pre-approved” in large print, destroy it before it destroys you.

Works Cited

Draut, Tamara. “The Economic State of Young America.”  Demos.org.  6 May 2008.

4 Mar. 2013.

Garcia, Jose.  “Borrowing To Make Ends Meet.”  Demos.org.  7 Nov. 2007.  4 Mar. 2013

Irby, LaToya.  “The Effects of Late Credit Card Payments.”  About.com.  2013.  4 Mar. 2013.

Wikipedia.  Credit Card Debt.  22 Feb. 2013.  4 Mar. Lauren Fry

Professor Celina Paquette

English 1301

March 5, 2013

 

The Danger of Credit Cards

            Credit cards should be banished.  I believe this because they are a ridiculous way to put you in debt.  Most people do not read into the fine print that comes along with that little plastic card.  Credit card companies are well known for targeting a younger group of people in their late teens to early twenties, and once that person applies and gets approved the problems start from that point on.  Today it is very common for a person with little to no credit to get approved for a credit card, and they do not realize that it can ruin your credit for a very long time.  I know from personal experience that credit cards are dangerous and would like to share with everyone that rather than opening that envelope, rip it up and throw it out of the window.

Credit cards may come by as a simple way to make a purchase, but if you do not have the cash to buy it, you do not absolutely need it.  This is a perfect example of why young people are targeted, I was 18 when I received my first credit card and to this day I wish I would have never opened that envelope.  Let’s say you go shopping to buy clothes or household items, it seems reasonable to charge it right?  This is not the case; do you even factor in the interest rates that will be charged or the late fees that could possibly accumulate overtime?  According to a statement made by a credit and debt management writer “missing credit card payments might not seem like a big deal to you, but your creditors don’t feel the same way” (Irby).  There can be severe penalties when making a late payment on your credit card.   You can accrue up to a $35 charge just for not making a payment on time or even an over the limit fee if your card is already maxed out.  And a late payment can be late even if it is an hour after it is due, so is it really worth paying that extra money?  It’s simple if you really need something just pay cash instead of pulling that plastic card out.

Unfortunately, it is too easy to make a purchase with a credit card.  You do not have to pay for anything right away; you can put it off for the next month.  But what happens when you do not have the money to make that payment?  Wikipedia states that “the results of not paying this debt on time are that the company will charge a late payment penalty (generally in the US from $10 to $40) and report the late payment to credit rating agencies.”  This can be the beginning of affecting your credit.  Your credit score is based on how efficiently you make payments and is a direct representation of your creditworthiness.  These are very important concepts to keep in mind for your future.  You might not think so when you are 18 or 19 years old, but ten years later when you want to purchase your first home or go buy a new car, the bank can deny you.  This can all stem from not having good credit and putting yourself into debt from using credit cards.

Another issue with credit cards is the interest rate.  Sometimes you can get 0% or a very low rate, but that is only if you have excellent credit.  If your credit is bad you can have an interest rate of up to 20%.  This can tack on a lot of extra cost when you are making minimum monthly payments.  The amount you owe on a credit card can go up in the blink of an eye because of such high interest rates.  This is a reason why people get so behind on their monthly payments, the amount owed can go up due to those rates and/or because of late fees.  Once you start missing payments your balance continues to grow and double, eventually you get so buried in debt that you cannot afford to even make that minimum payment.  The author of Borrowing to Make Ends Meet states “from 1989 to 2004, the percentage of cardholders incurring fees due to late payments of 60 days or more increased from 4.8 percent to 8.0 percent” (Garcia).  That rate rose almost 4% and that was almost ten years ago.  The credit card companies are out to make money off of everyone that has one and they will continue to keep people in debt for many years.

Debt is a horrible situation to be in.  A statistics expert states “the average college graduate has nearly $20,000 in debt; average credit card debt has increased 47 percent between 1989 and 2004 for 25-to 34-year-olds and 11 percent for 18- to 24-year-olds” (Draut).  This is an extremely high amount of debt, especially when you are graduated from college and on your way to a new career.  When you are in debt it is hard to get approved for many things; a car, home, or even a personal loan for an emergency.  Creditors will look at your debt to ratio and if you have too much revolving debt, they are not going to want to lend you any money.  And if you happen to be unemployed for several months, you will fall behind on payments and that will leave you in more debt.  This is why so many young people are subjected to credit cards; they do not have a mind set to budget money.  They just think of buying and buying; the consequences just do not sink in.  There are many young people that are responsible, but there are those that just do not understand what this can do to their future.  In some cases this can be a good way to learn to budget your finances, but it is not the greatest way.

I cannot stress enough on the dangers that credit cards can have on you, they are a great way for banks to drain you dry.  Just really think and read before you decide to take the risk of having a credit card.  Be sure to think about the interest rates you might have to pay, the late fees that can be tacked on, and the debt it can possibly put you in.  If you really need that new handbag or pair of shoes, wait until you have the money for it.  It is really not worth paying high interest on something that you could save your money for.  So next time you get that notice in the mail stating “pre-approved” in large print, destroy it before it destroys you.

Works Cited

Draut, Tamara. “The Economic State of Young America.”  Demos.org.  6 May 2008.

4 Mar. 2013.

Garcia, Jose.  “Borrowing To Make Ends Meet.”  Demos.org.  7 Nov. 2007.  4 Mar. 2013

Irby, LaToya.  “The Effects of Late Credit Card Payments.”  About.com.  2013.  4 Mar. 2013.

Wikipedia.  Credit Card Debt.  22 Feb. 2013.  4 Mar. 2013.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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