Right at the end of January, USA Today published an article that talked about how consumers were paying less money each month towards their credit card balances. This is bad news. On the one hand it’s good to know that consumers are making their monthly payments, but on the other hand it’s horrible to hear that people are sticking closer to the monthly minimums than has historically been true.
Credit cards are great tools to help build a credit history, but they have to be used properly or they can demolish a person’s financial status. Anyone who knows how to use money to their advantage can tell you that not all debt is bad debt. Sometimes a person can use debt to their advantage (for example, the right types of student loans and home mortgages). Consumer debt, though, is a different story.
The right types of student loans and home mortgages are investments in the long-term future of you and/or your family. Consumer debt, though, is more of an investment in the here and now – this is why it should be used sparingly. Sure, everyone falls victim to the use of consumer debt to meet their immediate wants. Hey, I spent a great deal of money buying a television last month just because I wanted it! Well, the old television was broken, too, but that’s a different story. That said, though, I do not believe that people should avoid credit cards. I think each person should have one or possibly two credit cards, but no more. I keep one to both maintain a good credit history and just in case I need access to a large dollar amount quickly (since I don’t keep much cash in my checking accounts – the money stays socked away in the savings and investment accounts).
In any event, I thought the USA Today article was pretty good and wanted to share. Enjoy!
Leave a Reply