Credit Cards And Debt

To understand everything about credit cards, one must first know everything about credit. “Credit, in commerce and finance, term used to denote transactions involving the transfer of money or other property on promise of repayment, usually at a fixed future date” (“Credit”). This means that people who use credit cards have made a promise of repayment. People who break promises usually face consequences, and that happens when they break this promise. If a person does not repay the borrowed money, then they will have debt, and no one should ever want to be in debt. It could take years for someone to get out of debt, and some people never even get out of debt. Debt can really ruin someone’s life, so it is best to try to stay away from it. There …show more content…
Most credit cards have a limit to how much money can be spent in a certain period of time. However, these limits can reach very high amounts. This allows some credit cards to “carry” thousands of dollars at a time. Consumers now have the ability to purchase many expensive things with their credit cards. Having this ability often leads to one thing, and that one thing is debt. There is a certain process to how this ability to leads to debt. It usually starts when a person finds an expensive item that they really want. They will use their credit card to pay for that item thinking that they can repay the money when they get the bill. When they get the bill, they will usually be unable to pay the whole thing. This cycle will often continue until the person has reached a very terrible debt. All of this information helps lead to the conclusion that credit cards lead to debt by making people spend more money than they …show more content…
“Travel and entertainment card companies and many banks charge cardholders an annual fee” (“Credit Card”). One of the many fees that cardholders - people who carry credit cards - face is the annual fee. An annual fee is a fee that must be paid once a year for simply having a credit card. Not all credit cards have annual fees though, so it is not the fee that leads to debt for all cardholders. “Cardholders receive a monthly bill. Most types of credit cards permit cardholders to pay only part of the bill if they wish. But cardholders then must pay a finance charge on the unpaid part” (“Credit Card”). A finance charge is another fee which may help lead a cardholder into debt. This is additional money that the cardholder must pay if they can not pay the bill in full. How much the finance charge is depends on the amount unpaid and the interest rate of the credit card. Also, a credit card bill has late fees if paid late just like any other bill. Annual fees, finance charges, and late fees are the fees that may lead a cardholder into debt, but those fees are not everything a cardholder has to worry about. Credit cards also come with an interest rate. The interest rate of credit cards vary, but it is based on the company providing the card and on how well one uses the card. If one is bad at using a credit card, then their interest rate will generally be higher. All fees associated with