If I Knew Then: Credit Cards

Buy now, pay later! No interest for 12 months! 0% interest is a very typical promotional tactic that credit card companies use to entice new customers. Deferred interest is awesome, but this “scheme” leads far too many people into debt… myself included.

If only I knew then…

Credit Cards: Not Free Money
Credit cards take away the physical aspect of spending money, turning the act almost into an abstract. It is harder to fully grasp the magnitude of how much you spend. It is far too easy to swipe a plastic card without fully considering whether one can truly afford the purchase. The situation worsens with the false security of deferred interest for many months. The future is again an abstract that often comes faster than one realizes.

12 months is not long, especially if you carry a high balance and only make the minimum payment. It is extremely easy to overspend when you think “the bill” won’t come for a “long time”.

Balance Transfers: Shifting, not Eliminating
The other big tactic in the credit card companies’ arsenal is balance transfers, which offer deferred interest for many months for a “low” transaction fee. Some people consider balance transfers as a way to buy them more time to pay off an overwhelming amount of debt. Sadly some wind up in a vicious cycle of balance transfers. Transferring a balance is not the same as paying it off. The debt is still very much there and has actually increased due to the balance transfer fee.

My Debt Story
I sadly was prey to both traps. I got caught like a fly on a spider’s web from all of the 0% interest credit cards I accumulated. I spent far more lavishly than I should have, again all because I thought I could pay it all off before the promotional period was up. Because I didn’t budget or keep track of my spendings, I ended up having high balances which I then resorted to balance transfers to avoid interest. I couldn’t believe I had become a statistic, part of the bunch with poor financial planning. It took quite some time, but after budgeting and planning, I was finally able to come out from under.

We Say
Do not become another victim for credit card companies to feast on. They bet against you, hoping to collect interest and fees. Always carefully consider any purchase, regardless of whether you pay cash or credit. Don’t spend more now thinking you can pay for it far later. You will end up paying much more!