While credit cards can be a great financial tool for New Jersey residents when used properly, there can be side effects to using them. The biggest side effect to using a credit card is the inflationary side effect. Although the rate of inflation has been 2 percent over the past few years, items that are charged on a credit card have the equivalent of 13 percent inflation. That is a level that hasn’t been seen since the 1970s.
This can lead to a general fear about the future, as a borrower is going to dread getting a credit card statement because he or she doesn’t necessarily know how to make the payments. Instead of being able to contribute to a retirement or savings account, more money will be spent on credit card debt and that can have a drag on household spending.
Finally, credit cards can have a huge impact on a person’s career. In some cases, switching careers can be a temporary setback on the way to greater career success. However, those who have credit card debt to pay have no room for such movement. A demotion or a long period of unemployment could be even more devastating to those who may not have the money needed to keep up with that debt anymore.
Those who are battling credit card debt may wish to speak to a bankruptcy attorney or to a credit counselor about their options to pay off that debt. While bankruptcy may seem like an option worth pursuing, debt consolidation or a debt settlement plan may also be viable options for anyone seeking debt relief. Regardless of what a debtor chooses to do, talking to a professional may make it easier to negotiate new payment terms with creditors or possibly stop creditor harassment.
Source: FOX Business, “The Side Effects of Credit Cards“, Richard Barrington, June 05, 2014