Almost every working adult in the United States owns at least one credit card. Most people think that having cash now is just lame and that everything should be on credit. Credit cards are basically where most Americans rely on especially when it’s almost that time they don’t have any cash with them or if they want to make an expensive purchase.
Credit cards are indeed very convenient especially at times when you need it. However, what most people still don’t get is how much these credit cards put them into so much debt. In 2017, the highest credit card debt in history has reached $1 trillion and that is according to the official report from Federal Reserve.
It was also stated that almost 90 percent of Americans actually regret paying for their debt that they get because of their credit cards. It may be considered convenient at times but having to pay for something expensive with the money that you don’t even have yet, has always been one of the biggest risks you’re going to take. In fact, according to the Experian agency, here are some of the worst things people use their credit card on.
Almost 90% of Americans regret being in debt over credit cards
Financial experts say that one of the worst things people can do with their credit cards is to invest in something using it. Investing is a risk that people take, some people end up getting rich because of it but some people lose almost everything as well.
So if you take the risk of investing on something with your credit card is not the best idea to have, it is literally investing on something with the money that you don’t even have. This is known as a debt-based funding, and it’s like earning the money that would end up being paid for your credit card debt and other interest charges. So it is still ideal to invest on something with the money that you already have, so even if you lose it, you don’t need to worry about being in debt and having a bad credit score.
It is also a bad idea to pay your mortgage with a credit card, simply because at the end of the day, you will gain nothing from it. Most of the time, you would need to use services to be able to do this and they would require fees that is most likely be way higher than the rewards you’re expecting to get.
Another thing people tend to do is go and pay their taxes with their credit cards. Despite the fact that the Internal Revenue Service actually does not accept credit cards, people may use third party filing software to do it. This just means that aside from the two percent that they would need to pay for the processing fee, they would end up paying more because of the third party filing software for its service fee.
What people want to get is the rewards from it, however, according to experts, you must only think of paying thru credit cards if the rewards you will get will outweigh the fees you need to pay, which rarely happens. Another not so great thing about paying taxes with your credit card is that you will most likely end up with more debt to pay and if you aren’t able to quickly pay for this, your credit score might be damaged.
People who are in college right now and those who are still paying for their student debt are still struggling, what more if you actually start paying for your college with a credit card? Financial experts say that believe it or not, student loans are most likely to be considered as low compared to what you would end up paying if you ever consider using your credit card to pay for your college.
$1 trillion is the highest recorded credit card debt in history
On Medical Bills
The healthcare industry in the US is definitely struggling because people end up having to pay soaring hospital bills and services. In fact, the United States actually has one of the most expensive healthcare systems in the world. But then experts say that there are way more options to pay for a treatment that you would need than to use a credit card. You might get even sicker once you see your credit card bills if you use it to pay for the healthcare services you had.