Do I need a credit card?

If there is one area of personal finance which has caused hardship for millions in the UK, aside from mortgages, it has to be the credit card industry. In the boom times many consumers in the UK used their plastic friends to increase their spending capacity with the idea that they would pay off any outstanding balance at the end of the month or else gradually pay off their short-term debt without adding further. So what went wrong?

The truth is that many people overspent in the boom times and when the recession hit home they saw a massive increase in pressure on monthly budgets. While many people attempt to demonise credit cards the fact is that if they are used in the correct manner, i.e. balances paid off at the end of each month, then interest charges will be avoided and debt will not mount up. Unfortunately, many people were over exuberant with their credit card spending in the years before the boom ended and are now paying the price.

At a time when money is tight in millions of households around the UK a great number of people could have done without the pressure of paying off their credit card debt. Whether people will learn in the future remains to be seen as used correctly there is certainly a place for credit cards in the modern era but those who spend "over exuberantly" could well end up paying the price for many years to come.