A credit card is a useful tool. Unfortunately, the pursuit of “more” and “better” has often perpetuated a borrowing strategy that is anything but effective. In an ideal scenario, a credit card would remain largely empty for the majority of the time, and be used sparingly for necessary items. It can be used in emergency situations or to account for a big and vital purchase.
Many people allow credit cards to take control of them and it leads to a need for debt consolidation. Debt consolidation comes in many forms, but the main angle which will be looked at here is consumer debt consolidation. Specifically, credit cards.
Credit Cards as Short-Term Loans
Credit cards are little more than short-term loans. They should be used as such. People do not generally receive a loan and continue to add to that loan as they are paying it off. They have a loan for $10,000 and use $10,000 of it for school or some other purpose. They then pay off the loan. They do not extend it out to $20,000 and add to it continuously.
Credit Cards As Protection
Perhaps this is the flaw in how credit cards are used. Credit cards can seem like financial protection in the sense that a person is able to spend to the limit provided. But, it is not active money but future money. It is not protection in the long term, but an alternative to use sparingly and as a short loan.
The above may potentially be one of the reasons why credit card abuse is so rampant. Consumers are borrowing incorrectly and they are running into some legitimate traps. The problem does not rest with the lenders who are only offering a service. The problem is in how they are used.
Debt consolidation can put borrowers where they need to be. Borrowers can see this site to get some grounding on their borrowing methods. The fault is not in the lender. It is in the borrower, and accepting this responsibility is the first step to making it right. Limit card usage despite how hard it is, and keep it much simpler.