Credit Card Debt: The Root of All Evils?
Is credit card debt destroying America?
With the growing economic crisis, credit card debt has become a massive burden for many people. Perhaps it's not surprising that there's a growing movement of people who think the answer is to eliminate credit card use altogether. But while these people advance seemingly logical arguments, it still comes down to one thing: responsible credit card use is better than avoidance.
Myths and facts
People who argue against credit cards rely on a number of myths and misconceptions to get their point across. Let's take a look at them.
Myth #1: There is no such thing as responsible credit card use. All credit card use leads to credit card debt
Truth: Borrowing money does result in a debt; it's hard to argue that. But that doesn't mean that responsible users can't use credit cards. If you pay your credit card off each month, there are many benefits to having credit cards. And let's take an individual who has a credit card and carries a balance of, say, $200. Let's say this individual is very financial conscientious and checks their balance regularly and never allows their credit card debt to pass $200. Can you really argue that this isn't responsible credit card use?
Myth #2: Owning a credit card makes you spend more
Truth: Studies do show that people tend to spend more when they use credit cards for payment than when they pay in cash or with debit, probably because payment is a future concern. But that just means that, if credit card debt concerns you, save your credit card for specific purchases (such as online payments or the like). Don't pull it out at restaurants or while Christmas shopping, two of the major culprits.
Myth #3: There's no upside to credit card use
Truth: This is the most dangerous myth of all, because if people buy into it they'll discover the truth only when it hurts them. As I've said before, you must have a credit history in order to obtain a mortgage, bank loan, or the like. And without a credit card, it's difficult to build that history.
So while credit card debt is a major problem, eliminating cards altogether isn't the answer -- not while responsible credit card use is an option.
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