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Helping good people through bad times

Avoiding the pitfalls of credit cards

For some consumers, credit cards offer the ability to make purchases at times when their liquid assets and cash flow are not enough to meet their needs, whether daily or out of the ordinary. When relied on too often, however, overuse can create debt that becomes hard to pay off. Tennessee residents who are tempted to use their plastic to meet short-term financial needs should understand when and how they should be used in order to avoid building up unpayable credit card debt.

First, consider that even a small amount of unpaid debt can lead to inflated debt because a card's balance grows not only by the unpaid principal but also by the added interest. In the end, a consumer is grossly overpaying for a credit card purchase. Also refrain from developing an exaggerated sense of lifestyle entitlement simply because a credit card is available. Many people are deluded into thinking that having a credit card means they can afford a better lifestyle at no real cost. In general, it is best to live within one's means even if a credit card is available.

Even if a credit card is available, recognize that the future is uncertain. Some people use credit cards thinking that past spending will be covered by future income, but this leaves out the possibility that something beyond one's control such as a job loss or an illness and medical bills could end up with debt that actually compromises the future.

Finally, think about family. Credit card debts can lead to foreclosures, creditor harassment and poor credit scores that not only can put a family into financial run but also tear it apart emotionally. However, for Tennessee residents who already are in deep trouble because of accumulated debt, seeking legal and financial guidance can help form a plan of action that, depending on the situation, may include filing for bankruptcy. This choice can offer help that can get provide a path through their financial challenges.

Source: Fox Business, "The Side Effects of Credit Cards," Richard Barrington, June 5, 2014

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Kenneth C. Rannick, P.C.
4416 Brainerd Road
Chattanooga, TN 37411

Phone: 423-624-4002
Toll Free: 800-257-7594
Fax: 423-624-0509
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