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I remember how alluring credit cards seemed me when I was younger: they were symbolic of status, wealth and freedom.
I decided I was mature enough to get a credit card when I was 18. My parents agreed with my decision, but passed on two important pieces of advice: I should always pay the full amount owed and I shouldn’t buy things I can’t pay for at the end of the month. I have continually followed their directions and, as a result, I’m in a much better position than some people I know.
The primary reason why I wanted a credit card was so I could avoid paying fees every time I made a withdrawal or paid for a purchase using my debit card. When I went to university about a year and a half later, I used my credit card to pay for larger purchases essential to my education and living away from home, such as textbooks, groceries and a gym membership.
However, I decided to apply for a second card which I could use for personal spending on things such as clothes, concert tickets and entertainment. Using these cards has been beneficial as I have eliminated the aforementioned fees to my account, but in addition they have aided me in establishing a good credit rating, which I will be able to use for a much larger purchase, such as a car or a down-payment on a house.
But I know many of my peers and older adults do not recognize the detrimental qualities of credit cards and yet still continue to use them to their harm.
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Hey, thanks for the mention. I completely agree with everything you said!
“People in credit card debt are more likely to be depressed, smoke, drink to excess, use drugs, suffer from insomnia and depression and contemplate suicide.”
Though this may be true for some, I think this description and generalization is a little extreme.
While I was away on my exchange in a foreign country, I found my credit card extremely useful and handy for my experience. As I didn’t have income at the time, it was hard to “eliminate my balance” at every statement although I would pay down as much as I possibly could.
I currently hold two credit cards with a few thousand dollars debt on them. Based on your description, as I don’t eliminate my balance every month and am sitting in “thousand dollars of debt”, I should be going through depression, insomnia, and use drugs.
Yes, credit cards are a way for banks to make money. But, you, as a consumer, also benefit using these credit cards – that is why you resort to them in the first place.
In any case, I agree with you that spending frivolously is a big no-no when it comes to credit cards. Being smart about your purchases, conscious about where your debt lies and aware of your ability to repay your debt is a good way to learn how to manage your finances.
I think Danielle was referring to people who are so much in debt they can’t hope to get out by simply paying the balances. As long as you have a steady income, a few thousand dollars is manageable.
However, speaking from personal experience during university, when you don’t have a steady income and the interest and over-limit fees are piling on top of the original balance, it can be seriously depressing and cause anxiety, insomnia and substance abuse simply to take your mind off things.
Just like a lot of things, credit cards are great tools if you know how to use them. If not, however, things can get ugly pretty fast.