Are credit cards really as dangerous as people say?
While the vast majority of people in the UK will have at least one credit card there are many people who are very reluctant to take on these potentially powerful and potentially dangerous financial instruments. So are credit cards really as dangerous as some people would have you believe?
The truth of the matter is, like any form of debt, a credit card in its simplest form, i.e. a way to pay for goods and services and then pay off the outstanding balance at the end of each month, has very little dangers. However, it is those people in the UK, and throughout the world, who see their credit card as an additional source of finance on a medium to longer term basis who will struggle. Credit card interest rates can be over 20% per annum and when you take into account potential late payment fines, administration costs and other payments associated with many cards, a simple issue such as even just missing your payments for one month can affect your financial well-being.
Used the correct way a credit card can be a useful payment method, and indeed many credit cards will give you bonus points the more money you spend, but if you let your credit card balance build up it can very quickly become a major problem and lead to financial distress or in the cases of many people, a financial crash. Treated with respect a credit card can be your flexible friend but treated with disrespect it can quickly become your worst enemy!
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