Habitually using personal loan as a way out every time you run into a financial crisis can have a very bad impact on your financial situation. You may find yourself overwhelmed with debt if you continually use borrowing as a solution to money problems. Continually going to a licensed money lender may bring you to the poorhouse and may even lead to bankruptcy. Borrowing money often is the most common reason why many people end up getting very low credit rating; being tagged as a bad credit risk or worse you ending up filing for bankruptcy. Another cause for why people end up having the worst financial crisis is abusing the use of their credit cards.
Credit Cards is an Easy Solution to Money Problems
People must remember that credit cards are only helpful in purchasing low cost items. This is to allow the card holder to easily manage the debt and ideally to zero out the account balance each month. The problem with people when using credit cards is that they also use it to cover large amount of financial needs. For instance, using a credit card to make a down payment on a car is inadvisable because the interest that it would incur would be so prohibitive. It would be wise consider these few things before you even think of using plastic for large amount of purchases.
Things to Consider
Before using cards to pay for purchases that are very costly, consider the terms and condition legally required by the card provider. You will note that fees, charges, and interest rates are highly influence by the amount of purchase that you do on the card. So the higher your purchase amount is the higher the fees and other charges will be too. Also take note of the “no interest” clause because there is no such thing. If there is, the offer usually have a time frame and it is usually won’t exceed 30 days which doesn’t give you much time to look for cash. More importantly, using the card continuously will cause a downgrading of your credit rating.