UK Debt Management

First of all, credit cards aren’t bad. They’re not created by banks and businesses just to drag you into debt. Credit cards are part of modern life. In fact, you will most likely need a credit card number to make a hotel reservation or book an airline ticket. It will be very difficult to buy anything from the internet without a credit card.

 The most important thing to know is that using a credit card is not like having free money. It’s actually the opposite. It’s a loan. And loans have to be paid back, and with interest charges. Imagine going to your local bank and asking your friendly neighborhood banker to loan you some money so you can buy a loaf of bread and some laundry detergent. Now that might sound ridiculous but that’s exactly what people do when they use their credit cards to purchase groceries without making full payments when the bill arrives.

Don’t let a credit card cause you to lose track of expenses. It happens, people just charge everything and then get surprised with a huge credit card bill. Whether using cash, cheques, or a credit card, keeping track of expenses is the key to good personal finance. Turn that credit card statement into your own tool for recording expenditures.

These organizations who offer credit cards put a lot of effort into marketing their products. Students barely out of school are encouraged to use credit cards. They say credit cards give you financial freedom. Credit cards have become status symbols to identify you as the ultra modern consumer. As soon as the next credit card commercial pops up, think carefully about what credit cards really are.

There’s a saying that goes, “If you don’t have the money to pay for it now, you probably still don’t have that money when you receive the credit card bill.” When you don’t pay the balance in full and continue to charge your purchases, you’ll soon find yourself with a hefty credit card balance with no hope of completely paying it off.

So the next time you plan on using your credit card to buy something, with no intention in paying the full balance, think about the real cost. If your credit card charges you 18% interest then add that to the price tag and think again. If flashing around that shiny piece of plastic makes you feel good about yourself, think about what it will do to your bank account.

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