Questionable Behavior: Why do we continually misuse credit cards?

Saving money isn’t just about calculating expenses versus income but rather can focus on any number of financial decisions you’ve made and how you manage money overall beyond just simple subtraction.

What about how you use credit cards, specifically misuse them?

Everyone has succumbed to using a credit card for something at one time or another, but the manner in which you use it could be costing you thousands. If you have $5,000 in debt and pay upward of 20 percent interest and only make the minimum payment, you might end up paying back in the neighborhood of four or five times as much as the original balance shows, thanks to interest.

So how did you get into that position to begin with?

Chances are you used a credit card for all the wrong reasons, and decided to carry a balance even after a low introductory rate seduced you into securing a card or perhaps buying something that you can’t afford but convinced yourself that you needed anyway.

Being smart with credit cards is, however, hard and easier said than done. Credit cards have always been about convenience and a simple, blind way to fulfill wants.

If you have buy gifts, and you don’t have the money, the credit card solution fits the bill. If you have a major emergency at home, and don’t have enough money to help the cause, you can turn toward credit cards at a moment’s notice. Or what about that vacation you have booked or honeymoon, and you’re just a little short on cash? How about using a credit card?

Sadly, only one of those situations would warrant even a thought about a credit card and that’s the emergency scenario. Otherwise, you should think twice about using credit and thus paying interest.

And that really is what destroys our financial prowess is our inability to not use credit cards for the wrong, mindless reasons. A credit card is not cash on hand, and should not be used unless it is a last resort. And if you have an emergency and can’t pay for it, don’t rely on credit cards. That should be a huge wake up call to rework your budget and start cutting expenses, rather than living at or beyond your means and using credit cards to help fill in those very expensive gaps.

This isn’t to say credit cards don’t have their perks, such as points, travel miles and other discounts when you use them. You actually can save thousands, for example, when you buy clothing at a department store at use your credit card over the course of a calendar year. But if you’re not prepared to get the discount and pay it off the next month, you’re spinning your wheels with debt and won’t be able to get out of park and help your financial standing any time soon.

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