Credit cards can be used in order to obtain debt. Many consumers hold credit cards with ten of thousands of credit available on them. A short swipe and you can spend lots of money which you will have to pay slowly in the future.
But taking credit on your credit card is not the best choice. There are many reasons why credit cards debt is bad but the first and foremost one is a very simple and straightforward reason. Credit cards debt is simply expensive. In fact credit cards are probably the most expensive form of debt available while ironically they are probably also the most easier debt to obtain.
Credit card debt can be used for any purchase. The money is there available for spontaneous purchases. Many credit cards are happy with consumers spending more on their credit cards than they can afford. The fact that at the end of the month you can not pay off your credit card bill is actually a very good thing for the credit card companies as they are happy to collect the interest on your debt. The credit cards companies are trying to maximize their profits the best credit card customer is a customer that each months pays the minimum required payment and the required financing interest on his credit card debt. The best customer would also eventually pay off his debt.
The credit cards are taking some risk in providing such easy debt as some customers will eventually default and will not be able to pay off their debt. Although rare this does happen. The reason why this is rare is that many consumers are somehow scared to default their credit card bill. Many times such consumers would prefer to take an equity line on their home or some other debt in order to pay off their credit card debt. One of the reasons of course is the fact that credit card dent is more expensive than any other debt which makes sense paying it off by taking a cheaper debt somewhere else.
Credit cards are great tools they provide an easier way to make purchases and also safety and security. Bad products purchases can be disputed liability when using credit cards is limited and of course Internet based commerce can only be effectively done with credit cards. Without credit cards Internet commerce would be basically zero. Credit cards are also a debt tool but that debt tool is really more of a trap than a good thing for consumers. It is a trap because it is so easy to get and use that debt. It is a trap because the interest on that debt is ridiculously high. It is a trap because many consumers take this debt unconsciously because of the ease of use they end up using their credit card more than they can afford to.
Using a credit card is something that can not be avoided these days of age. Reverting to a cash based society is impossible. But there is no reason why consumers would not be more educated about using their credit cards. Especially these days with online credit card access consumers can track their credit card usage on a daily basis to make sure they do not charge too much on the card just to find out at the end of the month that they can not pay off their statement. Some online credit card tools can also provide with alerts for when the debt on the card reaches a certain limit.
Danette Mckay explains about this subject in more depth at credit card, debit card, secured card, unsecured card, mastercard, american express, debt, credit, bad credit