The inevitable trap of credit cards and the abuse of banks on their victims can lead many to bankruptcy. There is no easy way out of financial situations when income simply does not match expenses. We all want the latest and greatest things on the market and many of us acquire them through loans on those pieces of plastic. The facts are, however, that the interest charged may mean that paying off such loans quickly puts them out of the reach of compliance.
Banks are not so honorable as to give up their main sources of income, namely credit cards. Those who use them are ‘cash cows’ providing their lenders with huge revenues and vast annual profits. It’s like when you bet money and receive little in return.
In times past, I too was hooked on credit and then some valuable lessons emerged. Items you bought during sales etc. cost double what they would cost if the same items were purchased with cash. Not only that, but many of the things that cluttered my closets were unnecessary and would probably never be used.
Banks and sales go hand in hand. You often see stores that offer additional discounts for using a Visa card. It doesn’t take a rocket scientist to figure out how much the company gets in exchange for this carefree treatment. You also don’t need a calculator to check where institutions get most of their money.
At the moment in Australia interest loans on property have never been lower. One can get a mortgage for something like 1.5 percent or even less. This is because the banks know that people will be forced to sell that property at a huge loss if they go bankrupt by using their credit cards. With that in mind, the offer of extended credit for the mortgage is given.
There is a movement underway here to force banks to disclose the source of their income, while the Opposition wants a Royal Commission on banking practices. With the focus on the continuing links between credit cards and bankruptcy prominent in the media, it is long overdue.
The best way to avoid cheating is to tear up the cards and not have anything to do with them. Bargains are only such when there is a genuine saving on the purchase. If money is managed correctly, buying things with cash will quickly become a priority.