The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Information on this website may not be current. This website may contain links to other third-party websites. Such links are only for the convenience of the reader, user or browser; we do not recommend or endorse the contents of any third-party sites. Readers of this website should contact their attorney, accountant or credit counselor to obtain advice with respect to their particular situation. No reader, user, or browser of this site should act or not act on the basis of information on this site. Always seek personal legal, financial or credit advice for your relevant jurisdiction. Only your individual attorney or advisor can provide assurances that the information contained herein – and your interpretation of it – is applicable or appropriate to your particular situation. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, contributors, contributing firms, or their respective employers.
Credit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them. Compensation is not a factor in the substantive evaluation of any product.
Like every 5-year-old, my daughter seems to have little understanding that the goods in the store cost money. Despite my explanations, she appears to believe that we can throw anything into our shopping cart, swipe my credit card, and have nothing else to worry about.
While the responsibility of using a credit card only begins at the cash register, it is one of the only visible times that credit cards are used in front of our children. Here are five aspects of credit card use that are rarely seen or spoken about:
The majority of credit card users in America routinely carry a balance on their cards. And when they do, that means that each and every purchase is incurring interest from the day it is charged until the day it is paid off. And since credit card interest rates are not small, typically running between 10% and 20% APR, most cardholders are ultimately paying a lot more for their purchases than what the receipt says.
Even without interest charges, cardholders are faced with a number of fees that they hardly recognize themselves, let alone share with their children. Common ones include annual fees, foreign transaction fees, balance transfer fees, late fees and cash advance fees.
When students need to pay for tuition, books, or expenses, but are out of cash, their credit cards are frequently used to fill the gap. But when their dream job doesn’t arrive promptly after graduation, credit card debt can linger for years. Often it is in their 20s that young adults finally realize the true costs of credit card use.
Credit cards entice their users to spend more in three ways. First, they offer the ability to finance unaffordable purchases. In addition, reward cards offer points, miles and cash back for spending. And finally, credit cards’ ease of use encourages cardholders to effortlessly make charges they might have thought twice about if they needed to use cash or write a check. Why don’t adults tell children about these things? They might not even realize it themselves.
In contrast to the other problems with credit cards, adults may keep quiet about all the benefits they receive from credit cards. Certainly, it is possible for cardholders to avoid interest, fees, debt and overspending while earning valuable rewards. But since so many are unable to successfully achieve this mastery, adults can be wary of encouraging credit card use.
Credit card use is not a dirty habit that should be shrouded in secrecy. Actually, it is our responsibility as adults to teach responsible credit card use so as our children grow into adults they understand both the hazards, and benefits of credit card use.
Image: Photodisc
April 9, 2024
Credit Cards
October 21, 2020
Credit Cards
August 3, 2020
Credit Cards