Discrediting Credit Cards

Less than a hundred years ago, making purchases on credit was a rarity in America. Some individual businesses created credit cards for their customers, but generally when one wanted to buy something but lacked the funds to do so immediately, they put it on layaway. When something was on layaway, the buyer agreed to bring a small, usually weekly contribution toward the total price, and when they had paid for the item in full they could finally take it home. Layaway remained available at many department stores into the 1990s, but now it has been phased out from most stores.

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One of the fundamental differences between layaway plans and credit cards is that the purchaser must pay in full for his goods before he can claim ownership when they are put on layaway. With a credit card, there is immediate gratification but it comes with its share of downsides, too. The first of these which may not be obvious on its surface is that credit cards make people much more prone to making purchases on impulse. After all, why not have what you want if you can pay for it later?

This leads people to spend hundreds, or even thousands of dollars that they do not have on things that they would not have bought otherwise. The excessive purchasing that is enabled by credit cards is the second major drawback for debtors in the credit card system. People tend to underestimate the impact of a present purchase on their long-term finances, and they often overestimate their capacity to quickly pay off the debts incurred.

This works out in the favor of the credit card companies, to whom you are contractually bound. They are entitled to take a variety of corrective actions against you in the event that you become delinquent, including assessing substantial fees, filing a lien, or pursuing legal action against you to recover the debts. Obviously, they would prefer it if you were to pay your bill on time or early, but if you default it only really gets worse for you.

The last way that credit cards sneak up on you is through the accrual of interest. Credit card companies are notorious for raising the interest rates on cards, and generally they can do so with few notice requirements to their cardholders. If you make a substantial purchase, say, $2,000 or more, and you only intend to pay the minimum monthly payment, then that one item will likely take years to pay off.

What to Do in Boston When You've Debt

If you find yourself oppressed by a mountain of credit card debt, it can be emotionally and financially draining, and the stress can take a very real toll on your health. Bankruptcy may be the best way for you to clear the deck and start making your way forward, free of the hidden dangers of credit cards and with a better understanding of how to avoid falling prey to the same pitfalls in the future.

To find out how bankruptcy might help, you should speak with experienced Boston bankruptcy attorney Joshua Spirn & Associates.

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