A Crazy Game of Cards

Government and financial institutions expect people to use their credit cards to keep the economy goin, but many times the debtor fails to submit payment for the full balance due. Making the minimum payment keeps the user’s credit rating in good standing, but failure to cover the accrued interest perpetuates a vicious cycle that extends the indebtedness for months on end.

Interest rates, alone, should be an incentive to limit the use of credit cards for emergencies. When the prime rate goes down, bans are still charging a minimum interest of 9.9% above the prime rate. Making the minimum payment keeps the user’s credit rating in good standing, but

There have been countless studies that have shown how Americans in general do not save what is necessary to have sufficient funds to cover times of adverse financial conditions. Moneys invested for retirement are as dismal. This suggests further stress on social services at a time when alarms indicate the insolvency of Social Security within 30 years.

Uncontrolled use of credit cards to make ends meet undermines what is professed to show stability of American consumerism.

In December, Washington passed legislation that gave corporations the option of discontinuing supplementary health insurance to retirees. Private insurers are sure to follow suit since the liability would further stress employee/retiree benefits. As the years pass, every American should expect to pay higher medical deductibles and be prepared to foot additional charges not covered.

Medicare has already implemented denial of payment to medical institutions deemed the cause of post-operative infections. Patients have the options to seek a resolution with the health care provider, pay the charges or seek legal representation. Yes, lawyers are sure to reap some hefty bucks, creating even higher service charges for future medical treatments as doctors and hospitals pay settlement fees.

Many patients are already forced to cover medication expenses by incurring further debt with higher credit card balances.

The average American carries a credit card balance of $8,000! The disturbing reality is that there are many who have a figure much higher as indicated by the word average. There’s no doubt some of the charges are something other than necessary purchases. Corporations instill into peoples minds and lifestyles to upgrade what becomes implied obsolete products as newer, improved models entice the need of those whose quest is to participate on maintaining an edge on products, services and technology.

Most consumers have multiple credit cards. The variety is tempting with banks, department stores, online sites and gas companies doing their best to entice the buyer with introductory rates, bonus points for a multitude of products and services, and balance transfers from higher paying creditors.

Homeowners are the cream of the crop to be targeted by financial institutions. Loan consolidation, refinancing and second, or third, mortgages offer the consumer to free up their credit cards for additional purchases. There are a lot of people who just can’t control their spending. It starts out as a convenience, graduates to a habit and eventually ends up as a psychological disease.

Americans are given little guidance for management of money and financial responsibility. Individuals must take it upon themselves save and plan for economic security for both short term and long term needs. Most corporations offer options for 401k accounts, possibly matching a percentage of the employee’s contribution.

Payroll deduction is the safest and easiest means of saving for the future but many feel intimidated by the risk factor of investment. With an established tendency to fulfill their needs of material possessions, their first thought is garnishing their wages for immediate use.

People are also leary of seeking the assisstance of a financial advisor, in fear they will be responsible for paying transaction fees. More often than not, they are afraid to loose the control they have to spend as they wish. They would rather be irresponsible about their responsibilities. When hard pressed for cash, their tendency to dip a little here and little there costs them dearly with early withdrawals. A professional advisor can allocate funds to accomodate the specific needs of every investor.

People supplement their purchasing power by taking the disadvantage of the convenience of charging items. They view it as a safer alternative to carrying cash or personal checks wherever they happen to shop. The convenience is, well, too convenient. So goes, too, those convience checks.

The best anyone could do is cut up all but one or two cards. And reduce the credit limit to a reasonable amount. A faithful payment history will allow you to increase the amount if necessary in the future. If you call the creditor to cancel even one card, it has an adverse effect on your credit rating! It sounds like a poor scoring method, but that’s the rules of the game.

Inevitably there will always be a time and occasion when the credit card will not only come in handy, but also necessary, such as a car rental and a secondary identification.

Go ahead and keep the card on hand. Just don’t keep it in your hand.