Credit cards used to be used only for large expenses like appliances or other expenses that we normally can’t pay up for up front, when the cost is spread out through repayments credit cards can be really useful. The trouble is that over the past few years we seem to be living in a credit culture where people have been blasé about getting into debt and not thinking of the future.
These days many people will make other purchases on credit cards that will hurt them in the long run. Entire families will now go on holiday paying for it on their credit cards, probably reaching their credit limit straight away. This was the case for more and more people towards the end of last year as 1.9 billion credit card transactions were processed.
Many people will say that this was obviously down to the annual Christmas spending where everyone buys their Christmas presents on their credit card. Whilst this can be argued in comparison to the previous year this year’s spending on credit cards has risen in value by around 8%.
The recent financial crisis has obviously contributed towards this reliance on credit and lending in the form of loans or remortgages. As more and more loans and mortgages are being declined so too are credit cards with the number of credit approvals dropping 2.1% towards the end of the year.
The advice people are being given is to be more prudent with their credit card use as having significant debts from credit cards against your name will not only prove more difficult to pay off as rates increase as well as other costly expenses. As credit cards become tougher to pay off it could end up hurting you even more if you aim to get a loan or a mortgage.
Having debts from credit cards can leave a negative mark on your credit report which will certainly come back to haunt you as almost every form of lender will be checking people’s credit rating before offering any amount of money. People who have poor credit ratings will increasingly find that they will be unable to get a loan or a mortgage.
So what if credit cards are our only option? Well there are many tactics to owning credit cards and managing them responsibly, realising that we need to use credit cards sparingly and ensuring that we should be able to make the repayments at the end of the month is a question a lot of us will be asking.
About the Author
andy adams is an experienced uk writer