Credit card debt is a way of life for Americans: Why so?

Credit card debt is a way of life for Americans: Why so?

“Credit card debt is a way of life for people in America” This statement is true.
According to the survey conducted by the CreditCards.com, 39 million credit card holders are carrying a balance from the year 2017. Well, this is the cruel gift of having credit cards. Because most of the people don’t manage their credit cards properly.

It is true that credit cards are the most convenient tools for purchasing items. People are using their credit cards to buy daily necessities. They also use credit cards to purchase things that they can’t afford in cash. Whereas, the credit cards should be used for emergency purposes or for buying an expensive item.
Though this statement is not fully justified. Because, if a person manages the credit card properly, then the card can be used for buying necessities and expensive items too.
Credit cards are convenient for buying daily goods as carrying cash can be dangerous and using a debit card is not secured.
But more important is repaying the credit card bill in full and on time, which most people don’t do and fall into credit card debt easily.

According to the survey of wallethub, the average credit card debt in America is $1.03 trillion. 6 in 10 young people in America have admitted that they make frivolous purchases with their credit cards and this would be the reason for their debt.
On the other hand, nearly 2/3 of Americans who are in debt, have said that they racked up debts to manage emergency expenses like car repairs or medical bills.

The survey also showed us some facts: “People are now more easy with their debt.”
As per the survey, 43% of people have said that credit card debt feels normal. Though, 46% of people have agreed that their credit card debt makes them feel stressed.

So, now, this is also true that for most of the people in America, credit card debt is a way of life.

Why are people getting trapped into the credit card debt?

Surprisingly, some people said that they never missed any payment, but still they are in credit card debt. They said that they know it will take years to finish paying down the debt. Why so?

Making only the minimum payments

Most of the people are making the minimum payments on their credit cards. But making only the minimum payments on your card is not enough. Because minimum payments make just a dent in the principal of the debt. You must repay the total balance with interest to the company. Carrying a balance means you will be in debt for a long time while racking up huge amount of interest.

Getting attracted to the credit card rewards

Remember, credit card rewards are marketing gimmicks. The credit card companies are trying to entice people by offering reward points or miles. But, these marketing tactics are actually forcing you to spend more (Paying 18% more to get 25% back in reward). Instead of spending more credit to get the rewards, you should concentrate on getting the reward for paying the bill in full.

How to avoid credit card debt

Here are some ways to avoid credit card debt to live a peaceful financial life.

Get a credit card with a lower interest rate

Don’t sign up for a credit card with a higher interest rate for some mere privileges like discounts, rewards, and mile. Also, some people signup for a balance transfer card. Make sure you get the card that doesn’t charge a transfer fee.
Usually, the balance transfer card offers 0% APR for the first 15-21 months (Introductory offer) with no annual fee and a low or zero balance transfer fee. Here you need to move the balance to this card to repay the debts easily. However, you should try to repay the balance within the offer period. Otherwise, the interest rate will be added up and you may end up paying even more.

Avoid using credit cards randomly

It is true that credit cards are safe as you can move cashless. But it is also true that it doesn’t let you feel that you are running out of affordability. Remember, you shouldn’t use a credit card to buy whatever you want. Because credit cards are not free money. Use a credit card to buy things when you are sure about your affordability. In short, don’t buy things with a card that you can’t afford with cash.

Build an emergency fund

Some emergencies can force you to use credit cards. In most cases, people don’t repay the bill in full and fall into the debt cycle. Thus, you have to build an emergency fund to avoid using credit cards all of a sudden. Try to build 3-9 months worth of savings in an emergency fund to manage emergencies like sudden illness, accident, job loss, and natural calamity.

Lastly, though it is true that accumulating credit card debt is becoming our habit. But you can still stay away from this debt by living life with less. If you practice frugal living, you can easily avoid the enticing living style that most of the people are living now.

How to become a smart shopper and avoid online shopping risks

It is easy to compare prices, save enough time, and also avoid the rush while shopping, as we have the internet at our fingertips. But online shopping is also a prime risk zone where people might become a victim of identity theft.

Recent studies show that nearly 51% of purchases are made online, and the number is still growing. This increase in online shopping has also made it easy for cybercriminals to harm common shoppers. Consumers are becoming victims just because more people are using the internet without knowing the potential risk and how to avoid such a threat.

So, before plunging into the internet, you must be aware of the do’s and don’ts of online shopping. This way you may protect your personal information and reduce the risk of an online scam or identity theft.

Dos:

Compare prices and discounts –

Most of the online shopping sites offer great discounts throughout the year, but you must make sure you are getting the best discount available for your product. You must compare similar products with the value of their offered discounts, prices, and delivery charges. Choose the best item with the maximum discount available, and make sure you apply the right coupon code for the product.

Check out reviews –

No matter what happens on the internet, no matter how much discount you are getting, always shop after checking out the reviews given by previous shoppers. You can use your PC or smartphone to check reviews at any point in time. It’s better to buy products that have mostly positive reviews.

Prepare a list –

Make a quick list of the products you need primarily. Make sure you prepare the list considering the best brands, best prices, maximum discounts, and quality of the products. Now you can arrange the order of buying based on requirement or price. If you find out some items in your list are on sale, you may buy them first.

Create a budget –

Buying items on discount through online shopping can’t help you save money. You should set a budget for every item you want to buy. Set up the budget based on what you can afford and for how long you’ll be using the item.

Read the fine print on every item –

Most online shopping sites monitor their visitors and offer discounts on the basis of their age, spending pattern, choice of products, selected brands, and other important factors. While buying some item, make sure to go through the terms and conditions a.k.a fine prints associated with the product. It is possible that a certain big discount is applicable to you only if you purchase worth a certain amount, or buy 1 get 1, or on certain brands only. You might also need to check the guarantee and return policy of that product.

Use cash while making payments –

You’ll spend less when you purchase items with cash. Use cash while buying products from the store; you might get a good cash discount. Of course, it is easier to pay using a credit or debit card when you shop online. It that case, make sure you are paying back the card within 3 to 4 days after buying such products.

Verify the website’s security –

You must keep yourself away from the online shopping risks as much as possible. For that reason always shop from the website that is secured. How do you locate a secure website? Find websites with “https” in the URL, or look for a tiny padlock icon in your browser before you confirm the site as an authentic, secured website.

Keep tracking your statements –

Track your bank statements every month. If you ever notice a discrepancy, you may demand an explanation from the retailer. For example, if your credit card company overcharged you the interest on your credit card, you call the retailer and ask them to correct the error.

Don’ts:

Avoid impulse buying –

It’s wise to avoid impulse buying as much as possible. If it’s not on your list, make sure you don’t add it for the time being. Online shops may give you lucrative discounts on items you don’t need right now. But, you should avoid buying those stuff you didn’t plan to purchase. This way, you can tame your overspending habit and save a decent amount from your monthly budget.

Stop using cards –

Using a credit or debit card for online shopping can trigger the chances of online fraud and identity theft. Once you provide your card details into the online shopping site money transfer portal, there’s a chance that hackers may hack your login and fetch your personal data from there. So, to increase your online shopping security, make sure you do not save your card details on that website just to make “one-click easy” payments.

Do not purchase food items online –

It is quite difficult to visit the grocery store, again and again, only to buy fruits and veggies. But presently, many websites deliver the purest form of food products, especially organic food or health products at cheap rates.

But do not buy food or health products online. Fresh food items and health products should be purchased directly from stores to ensure authenticity. Moreover, health products should be bought from popular stores since there are many websites online where fake products are being sold.

Avoid social networking sites deals –

Do not trust such deals. Most of the URLs appearing in social ads are customized and will redirect you to social media sites. It means you might get redirected to a fraudulent website. You can view those deals as the reference but go directly to the retailer’s website for more details.

Avoid taking your friends with you –

It’s quite amazing to go shopping as a group, or with friends. But trust me…it’s also dangerous.
If you need to shop smartly, it is wise to go alone. This way you’ll get most of the good deals left only for you; with friends you might not get all the offers and discounts alone.
Also, people spend more than usual when they are accompanied by friends. They may engage in impulse buying most of the time when they are with friends. As a result, they fall into debt trap.

Don’t use wire money to pay for any product –

After buying a product from an online auction site, such as eBay, the seller might ask you to wire your payment. That is a mistake, don’t do it. Wiring money may push you into a fraud situation. You can’t get your money back if the item you ordered never arrives. Pay with a credit card so you can dispute the charges if you don’t receive your item.

Don’t forget to inspect your new product –

Notify your seller as soon as you get your package delivered. Check your product properly and call the seller if you have any issues. The seller may pick up your package and if the issue is genuine, you’ll get the replacement or the money will be refunded.

Don’t shop using public computers –

Online shopping will require your personal financial data, like credit card number, name, address, pin code, etc. So, if you are using a public network computer, like the one at a coffee shop or bookstore, stop it right now to avoid online shopping risk.

Hackers may access your private data by accessing your account through the public network. Those networks are pretty vulnerable to hackers and they can easily sneak in. Shared computer networks can be bugged with spyware or other malicious viruses. These viruses can harm your computer and report your credit card information to hackers. If you really need to use a public computer or network, try scanning it first with an antivirus, internet security software like Kaspersky, Bitdefender, Norton, Mcafee, or any other software. These softwares can even increase your online shopping security to the next level if you use them at home, in your personal PC, laptop, or phone.

Do’s and don’ts of online shopping can be controversial. So, without thinking much, just follow your instincts. When you create your list, try to follow the order and don’t buy anything that’s not there. If you are getting a better offer for your product, check them out. But whatever you do, keep patience.

Posted in how