Negative Things about Credit Cards

If you can't handle credit cards responsibly, just cut them up.credit cards image by Aleksandr Lobanov from Fotolia.com

In the right hands, credit cards provide financial flexibility, enabling a consumer to make basic--or even occasionally extravagant--purchases (e.g., paying for that extra cocktail after a hard days work, or buying that perfect engagement ring that she will love.) However, in the wrong hands, credit cards are a deceptive tool, allowing a consumer a false sensation of wealth, when in reality he is becoming quite poor, quite rapidly.

Inducing Bad Habits

It is not the credit card company's fault--entirely--that people make bad financial decisions. But credit cards certainly can be luring. According to the award-winning documentary on the credit card industry, "Maxed Out," credit card companies spend millions each year trying to convince consumers that credit is essentially free. Moreover, they try to convince consumers that spending immediately is much more important than saving for the future. Thus, many credit card users fall into bad habits, believing falsely that short-term pleasure is worth long-term financial pain.

Credit cards also frequently burden people with more debt than they can afford. Again, used sensibly (i.e., with a plan of exactly how the debt can be paid down), credit cards can be excellent financial tools. However, credit cards are often used because a current expense is unaffordable. Thus, credit cards induce what financial planner and credit expert Jim Randel warns very strongly against--living beyond your means. If you can live within your means and enjoy your life, then you are--for all intents and purposes--wealthy. If you cannot be happy with what you already have, then you may soon fall victim to debt.

Credit card companies are notorious for hiking interest-rates, often in response to the slightest delinquency in payment. This is not illogical--it is how credit card companies make their money. Nonetheless, that doesn't mean the interest-rate hike is fair to the consumer. For example, according to The Washington Post, in 2009 credit card companies substantially hiked interest rates in anticipation of Congress' imminent regulation of the credit card industry.