The Credit Card Drug

Credit cards are just like drugs. There is no better analogy. They offer short-term pleasure and long-term pain. They give the illusion of having more money than you actually do. Then you live with less because each month a portion of your income is siphoned away paying past credit debt.

A Building Block of Life

Did you know the average American family carries about $8000 in credit card debt and has on an average 6 cards? Furthermore, if no additional purchases were made and the average family made only minimum payment, it would take 22 years to pay off the average credit card debt. Credit card debt is counted in the billions of dollars.

Credit is positioned like a platform or building block of life. “And for everything else there’s xxx card.” It is almost considered inconsequential to use your card. It seems the purchase (whatever it is) is “far too important” to have any cost matter.

Therefore we use it, and use it, and use it until we literally cannot survive without it. Some folks would be shocked to learn that not carrying a credit card is not against the law?

Smiling Creditors Are Not Your Friend

Creditors are not doing any favors by extending credit no matter how friendly their facade. Their purpose is getting you hooked and draining off your future wealth. This is future money that you can not guarantee is going to be there. Why? Can you guarantee you will have your job tomorrow, next week, next year, in 10 years? But we promise it away just the same.

Creditors are not giving us anything. They are not adding one penny into our life. Consider this. Creditors do not make a penny until we go into debt. Therefore, do you really think they hope to contribute to your future wealth or do you think they just might prefer that you are horribly irresponsible and charge everything you see? They want you in debt and the deeper the better.

And just as you think you are smart enough to climb out of your credit entanglement, your “friendly” credit card executives are figuring more and better ways to offer conveniences to entice you to use your card even more. For example:

1. Have you noticed how many fast food places now take credit cards? Now there is a conflict in ideologies, “fast food” and “credit card”… hhhmmmm.
2. Did you know taxicabs and parking lots now take credit cards? I sure hope it’s a deductible expense. The compound interest it generates, of course, is not.
3. Movie theaters now report 25% of payment is by credit card.
4. The other day I saw a young man at a grocery store paying for 5 candy bars with a credit card. Talk about short-term pleasure and long-term pain. That has got to be a prizewinner.
5. IRS now takes credit cards — a double whammy.
6. Many mortuaries now take credit cards. Why does that sound strange and why is it a fitting last example?

The fact is, credit card executives now know that most credit worthy people already have 2+ cards. But they still send out 2.5 billion solicitations annually and the average household receives about nearly 24 applications per year. Still, finding innovative ways to increase credit debt is their primary solution to increase profit. As one bank card executive reported, “We will break down the barriers of debt.” If that does not sound like drug dealing I don’t know what does.

What Will We Teach Our Children?

Until we learn to shut off the wealth sucking valves, we will continue to drown in a sea of debt. Until we stop creating new debt with the convenience of a credit card, we will continue the strangle hold of our creditors. Until we start operating on a cash basis, we are doomed to a life of debt.

Our future and the future of our family is at stake. And until we make a decision in favor of ourselves instead of the credit card industry, we will foolishly squander our future by living in an illusionary world and paying its price,just like an addict.

I offer one final note. Obviously I am opposed to credit cards. But I also recognize that we live in a world of plastic. In and of itself, there is nothing wrong with a credit card. It is an innocent piece of plastic. It is what we do with it that makes a difference. If an individual finds they cannot control their use of the card, the card must be completely eliminated. It is as simple as that.

Mike has been an Internet Guide/Writer in the field of Credit/Debt Management for over 10 years. His site was awarded Best Of Net by Forbes Publication from 2000 to 2005 with site visitation doubling to over 500,000 average views per month in the last year.? He has also offered debt elimination seminars to businesses and community colleges for the last 9 years. He has been interviewed on the radio a number of times and referenced in numerous publications. http://learncreditmanagement.com/

This entry was posted on Friday, February 23rd, 2007 and is filed under Credit Cards. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
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How Credit Scores Affect Mortgage Applications

With a good credit score an applicant will receive prompt response from many lenders, all of them offering low interest rates and low down payment options. The loan amount offered also may be high. On the contrary a low credit score would result in a lot of rejection from various mortgage financers. Because creditors wouldn’t come forward easily to give credit to individuals that have a history of difficulty in repaying existing loans. After all, creditors take risk when they finance mortgages against the credit history of a debtor. Naturally, they will wish to remain on the safe side and pick up less risky ones that have good credit histories. A good credit score means less chance of missing on payments and therefore less risky.

But there are some real risk takers that will come forward to finance mortgages for individuals with bad credit scores. They would charge high down payments and always high interest rates though. They may also fix additional charges for every little paper work and may charge high closing rates. The loan amount offered will also be considerably less. The individual with poor credit scores will not have much choice but to accept the terms and conditions as there are no other alternatives. This is a tight situation and to avoid this you must have a good credit score.

People with bad credit may fall in to the trap of ’secured loans’. Secured loans are the ones where the loan applicant offers an asset as collateral security. The lender becomes secure about the repayment of the loan and not the borrower. Securing a loan with bad credit score becomes easy only when the applicant is willing to offer some asset as collateral security. This again is a very dangerous situation where an individual runs the risk of losing his entire collateral asset in case of failing to pay the loan installments in time. An individual should always avoid such type of a loan.

Resort properties normally require large amounts of finance which a person with bad credit may find it difficult to obtain. So it is always advisable to keep your credit score high. Incase the credit score becomes low due to unavoidable financial reasons it can be improved upon. There is no need to lose hope simply because a person has a low credit score. If the property that he intends to buy has good equity he should go out and try to obtain finances for it. There are many sub prime lenders willing to offer their services.

For a review of your credit report as it relates to a mortgage loan and a consultation on the best loans available to you, give us a confidential, no obligation and no cost call.