Dangers of Credit Cards

Most of us see credit cards as a convenient means to control our finances and as a quick source of funds.

However, with these benefits are responsibilities that should be taken seriously lest we want to be buried in debt. There are numerous dangers of credit cards that we should look out for, some of them we may already be in before we know it.

The dangers of credit cards start taking over, first, when we fall for pre-approved offers and switch to them. Pre-approved cards often promise lower rates with conditions in fine print that anyone could miss. Failure to meet these conditions can get you in a situation where you spend more money than you should. Before agreeing to the terms of these cards, you should be aware of all the stipulations attached to them. Most dangers of credit cards arise from unawareness.

Another issue that can make credit card dangerous is the existence of bait-and-switch offers. This is when you receive a promo mail offering you a low-interest card. When you take the bait and you are not approved for the card, you are issued another one which has higher rates and more fees attached to it. You don’t even realize this switch until your card arrives, or worse, until you receive your first bill. This is one of the dangers of credit cards that are due to unawareness.

Other dangers of credit cards do not entirely rest on the consumers’ lack of knowledge. Sometimes credit card companies themselves intentionally hide pertinent information from credit card holders. Most of the time, exact interest rates are masked, or if you’re offered a low rate, it increases significantly as months go by. When you don’t ask them directly what the rate is, you can get hoodwinked into something you’re not prepared for.

Other dangers of credit cards include the inescapable transaction fees that come with balance transfers and cash advances. These features often lure us into getting another credit card but they can become problems when you misuse them. Aside from transaction fees, they are also bound by interest rates that will eventually increase after the promotional period.

Not using a card can also lead to inactivity charges that can go for as high as $15. Since credit card companies only profit when a credit card is used, they attach fees to inactive ones that stay in cardholders’ wallets.

However, of the dangers of credit cards mentioned, the most difficult to ignore is the default rate. This is a fixed rate that can be charged on a credit card that is either late on payment or has gone over the limit, depending on the rules of the credit card company. This rate can go as much has 30% and can put the cardholder into trouble when s/he is not careful.

Ultimately, the dangers of credit cards come from improper use and ineffective money management. Credit cards are great tools if we only learn to use them properly.


Source: Credit Cards For People With Bad Credit Rating

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