Canadians Rebuilding Credit Histories Should Be Careful Of Credit Card LoansCanadians Rebuilding Credit Histories Should Be Careful Of Credit Card Loans

Canadians love swiping their credit cards. Indeed, it makes the purchase of simple items more exciting when plastic is used to pay. Compared to sorting bills and counting coins, having the sophisticated convenience of credit cards is preferred by many citizens. What feels even better is the not having to feel the guilt of an unreasonably expensive purchase because cash doesn't seem to decrease in your lovely new wallet. However, do credit cards really make life easier for most consumers?

It's understandable how one can lose track of financial priorities when credit cards are concern. In fact, charging too much can be ignored when you feel so good about buying things. That is how lending institutions want their customers to feel. We feel so good about spending that Canadians have $50 billion in credit card debt from accumulated interest. Now, it doesn't sound so fun anymore.

Let's face the reality that financial institutions would want you to spend because that's how they will earn money. It has also been observed that since the onset of recession, people have been more prone to making poor choices when it comes to debt management. This has a lot to do with the vigorous efforts of credit card companies to get you to take more gimmicks and promotions that will subtly or sometimes blatantly, cause you to spend more.

One example is a new low-interest deal that encourages many people to move to different credit card companies together with their balances. Even more persuasive is the fact that they will even help you move the debt, free of charge. However, the catch is these extremely low interests don't last. After a few months, you will be a handed a new interest which will be the extreme opposite of low. Others will let customers maintain the low interest but even only after one day of late payment, a new interest which serves as a penalty, shoots higher than the sky.

When customers can't make payments on time, all purchases for the succeeding two months will have interest charged to them. Credit limits don't always remain the same. Financial institutions can raise a customer's credit limit without the need for any consent. For many people who don't notice the significant change, they have to pay the consequences. Always keep an eye on all activities concerning debt. Cash vouchers are there to promote more debt during peak seasons like tax time and holidays. These operate like credit cards because the minute they are cashed, your debt increases.

Credit counselors concur that when people get used to not paying the full amount of debt within the month, they get used to the borrowed money as a means to boost their income. For people who experience this, it is very difficult to cut cost and pay off the money that was borrowed unless they have some other way of earning extra income. Senior citizens are students are considered pre-approved individuals for credit card companies because they are easy target. They are given high-limits so that they end up paying the credit for years. It is normal to find people who earn $30,000 annually with limits set at $20,000. Retired people seem to have more reason for using their credit cards because their spending power decreases. On top of that, pensioner's children who live with them tend to increase the bills so one has to resort to credit cards to cover the excess cost.
by Syd Z. Nohcud
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