Since credit cards can be both of great use and a gateway to financial ruin for many people, many financial experts have been urging consumers to use their cards responsibly.
Personal and business bank account holders have reaped the benefits of credit cards for many years. The ease and convenience of not having to carry cash, the ability to stretch the cost of purchasing big-ticket items over several months, and having a source of emergency working capital in a pinch are all very useful.
However, there are those who use their credit cards irresponsibly. Some have gone out of their way to spend money they don’t have on items they don’t want or need simply because they have the ability to do so.
The result of all this frivolous spending is massive personal debt levels across the UK. Consumers take out personal and business loans or rack up purchases on credit cards only to blow the cash on luxury items such as extravagant holidays abroad and buying high tech gadgets and cutting edge devices. Some consumers seem not to realise that all that money they’re spending will have to be repaid someday – and none are particularly happy once they see the interest rate on their card statements.
One recently published report indicates that many consumers check the credit limit on a new card while neglecting to discover the interest rate the cardholder agreement stipulates. Industry experts believe this is due to a large proportion of people planning to spend indiscriminately instead of utilising their credit in a responsible manner.
Worse yet, many consumers spend needlessly on their cards even in the face of extremely high interest rates. Such activity can easily lead to debt levels spiraling out of control.