About Donell Edwards: Donell Edwards is President of CWR Media and is also founder and publisher of The College World Reporter (CWR) magazine and CWR World News & Information Service. He is also a professional speaker, freelance writer, and entrepreneur.
Know Your Money
Wednesday – March 19, 2014
Spending Control: Credit Card Addiction
By Donell Edwards
Many people treat credit cards like real money, and it is true that credit cards may be used to make a variety of purchases, but the difference is that with real money the purchase transaction is finalized once the purchase is made. With credit cards, a debt is created that must be repaid with interest assessed at some point in the future.
According to projections based on data from the U.S. Census Bureau there were 1.167 billion credit cards in the U.S. in 2012 and there were 160 million cardholders. We have a credit economy and most people are deeply in debt.
Credit cards do have a purpose, which is convenience. In many instances it convenient to pay with a credit card instead of carrying cash, especially large amounts of cash. It is also almost impossible to reserve a hotel room, or rent a vehicle, and make other transactions without a credit card.
However, control must be exercised, and credit cards should not be thought of as money because they are not. Too often we fall into the habit of buying things we don’t need just because it is so easy to say, “charge it!” Before we know it, our credit card balance, I should say balances, have ballooned to the point where they have maxed out and we have all that credit card debt, and the burden of making the payments, which many times depletes our cash reserves. Then what happens when something unexpected happens? Many seek more credit by getting another credit card if they have not already ruined their credit, or they seek to increase their spending limit on existing credit cards.
Is this really wise? What is the real purpose of credit cards anyway? They are for convenience and for real emergencies, they do not replace cash. Here is a good guideline to follow. Ask yourself if you have the money to make a purchase first, remembering that credit cards are not real money, ask yourself, do you have the cash to make the purchase. If you don’t have the cash, then should you make or increase your debt by making the purchase with a credit card?
A popular credit card company uses the motto, “What’s in your wallet?” The implication is that if you don’t have their card you are a nobody. The answer to the question, “What’s in your wallet? should be, my money.
There are some great articles with suggestions on how to eliminate credit card debt at the end of this blog.
Have a great day and avoid credit card addiction.
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