Countless businesses throughout the nation are having to try their hardest just to stay afloat due to the stagnant economy, but Visa somehow managed to increase its profits by 73%. In order to make that much money, lots of people must be using their credit cards. However, most consumers do not have the spare cash to buy new televisions, computers, and the like, and the companies that manufacture those items aren’t reporting record-breaking sales. Given these facts, the only possible explanation for Visa’s success is that people are using their credit cards to cover their living expenses.
How to Know If You Rely Too Much on Your Card
The problem with using a credit card to pay your normal living expenses is that you are almost guaranteed to be borrowing more than you can pay back. If you don’t have enough money to pay for your lifestyle now, where will you be getting the money to preserve your way of living and pay off your credit card debt in the future? Unless you expect to significantly increase your income very soon, the only way to avoid going into credit card debt is to spend less money.
Now is a good time to take a step back and take an honest look at your expenses. If you’re not sure where all of your money is going, now is also a good time to make a budget for all of your expenditures. For every item you buy you should ask yourself if you really need it. Hopefully there are a few things that come to mind that you can do without. If so, you should realize that you are using your credit cards to live beyond your means and that you need to stop. Credit cards should be a useful tool that you control, not a necessity that you rely upon in your daily life.
The Consequences of Relying on Your Credit Card
The consequences of using credit cards to take out loans that you can’t pay back immediately are dire. For every $3000 you borrow, it takes an average of six years to pay back the credit card company if you make the minimum payments. Even worse, you could easily end up paying over $8000 during those six years to cover your initial $3000 loan due to interest. The fact that you have to pay back more than double what you borrowed is why using a credit card to shore up your financial situation is a bad idea.
If you do fall into debt there are a number of debt management programs that can help you out, but staying out of the debt is the choice that is easiest on you by far. Avoid depending on credit cards to maintain your daily lifestyle and you should be fine. When credit cards become a financial necessity, though, you end up substantially damaging your financial future. If you need credit cards to make ends meet right now things will only get harder in the future.