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Helping good people through bad times

Avoiding the pitfalls that credit cards offer consumers

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. When relied on too often, however, overuse can create debt that becomes too 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 could be abused 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. Second, 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.

Third, 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 a catastrophic illness, could end up causing debt to compromise the future.

Finally, think about family. Credit card debts can lead to foreclosures, creditor harassment and poor credit scores that can not only put a family into financial rough spot, but could also tear it apart emotionally. However, for Tennessee residents who already are in deep trouble because of accumulated debt, filing for bankruptcy can offer help that can get them 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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