Once upon a time, credit shared a correlative relationship with how much someone was “good for”—essentially what he or she could afford to pay back over an extended period of time. These days, just about anyone can open a line of credit, and with retail stores, hotel chains, and airlines offering specialty cards, it’s almost too easy to find yourself with a wallet full of cards and no cash. Getting a credit card is simple; keeping balances low and paying making monthly payments towards one or more cards is challenging, yet nevertheless imperative.
A responsible individual will maintain constant vigilance when using credit cards: He or she knows the balances for each card; sets limits for spending; and keeps track of due dates. Not engaging in these behaviors could lead to the slippery slope of negligent spending. Missing a payment will cause an interest rate to skyrocket and will bury someone underneath a mountain of debt if not careful. Neglecting to pay off your balances is precarious. If any of the following behaviors describe you, you may be a credit card abuser.
1. The line between need and want has become indistinguishable. You have unworn clothes or items still in original packaging. You buy perishable food in mass quantities because “it’s a good deal”, and then throw away the majority of it when it spoils. You don’t have to be so tightfisted as to only purchase what you deem a necessity, but giving into your every whim is a sign you are a compulsive shopper. When compulsive shopper’s expenses are larger than his or her income, credit cards seem like a quick and easy source for cash.
2. Credit cards balances are growing. Ideally, all purchases charged should be paid off every month. Paying your credit card off each month demonstrates an understanding of how to live within your means, and it keeps you from owing interest. People who mismanage money tend to have an ever expanding debt accumulating. Even if you are making the minimum payment every month, it covers little more than the interest accrued and leaves your balance, the source of your debt, virtually untouched.
3. All your credit cards have been maxed out. Your solution to free up some credit is to open a new card instead of paying off your current balance like a responsible person. A rational individual would recognize the need to pay off the balance of a maxed out card. A credit card abuser, conversely, sees a maxed out card as an opportunity to open a new line of credit.
4. The amount owed is a mystery to you. Advances in technology make it almost impossible for someone to be unaware of your finances. Computers allow us to transfer funds and monitor our money with just a few clicks of a button. Most major banks have smart phone applications that allow instant access to accounts. Regardless if you have no idea how much money you owe because either you do not checking your balance or you spend money so fast you have a knack for wearing out your cards’ magnetic strip, it’s irresponsible.
5. Lying about finances has become a normal occurrence. Distorting your ability to handle money is reckless; furthermore, it has the potential to destroy relationships and trust. You have developed the habit of sprinting to the mailbox to snag the credit card bills and collections notices to save face from your roommates. You tell your mom you got a “great deal” on the new phone you really couldn’t afford so she won’t castigate you for poor spending habits. When you share financial responsibilities with a family or roommate, it is best (maybe not the easiest) to be upfront when it comes to money. Dishonesty concerning your economic situation leads to unnecessary stress and strains on relationships and friendships.