This current economic crisis has caused a tidal wave of debt and the inability to pay down such debt. Regardless of whether it’s mortgages, credit cards, or other loans – living on credit has become the norm rather than the exception.
We all know the hidden dangers of incurring too much debt. Some may not be able to afford to pay more than the minimum monthly balance due on credit cards. This just adds more stress to an already problematic situation.
Moreover, due to the rise in unemployment many people have lost their healthcare insurance. This means that they may have to use their credit cards to pay for prescription drugs, doctor visits, or emergency care. Currently, according to one United States Senator, 11,000 individuals a day are losing healthcare insurance due to business closings, mergers, and the inability of major corporations to maintain their bottom line.
In December alone, there were over half a million jobs lost and this year, the projections indicate that more of the same will occur. Even as we speak, the credit crunch is causing massive layoffs. Estimates are that unemployment will reach double digits by the end of the year.
Yet, individuals may have no other choice than to use credit cards to buy even the most basic necessities such as food, clothing, and prescription drugs.
As an example, one woman was given four prescriptions by her doctor. Although she has very good healthcare insurance, her co-pay was $177.00. This is mainly due to the fact that each year a deductible has to be met. In her case, it was $200.00. Afterward, the costs will fall back to the usual $5.00 to $9.00 per prescription. Needless to say, she charged the amount on her credit card.
Given the fact that her current interest rate on the credit card is 20.99%, the cost of those prescriptions drugs is now considerably higher.
This is the hidden danger of using credit cards, especially in this current economic crisis. One could argue that she should have gone to the bank and taken out the cash to pay for the drugs. But research has shown that individuals are more likely to use a credit card than to part with their well-earned cash. Most would say her reasoning does not excuse the fact that this action will increase her debt.
There are so many instances where individuals use a credit card for items that can easily be paid for with cash. And statistics show that more and more people today are using their credit cards to pay for healthcare costs regardless of whether or not they have the cash on hand.
Credit cards are akin to Monopoly money. There is no emotional attachment to credit cards. It is a means to an end, even if that end means that a person will be paying down debt for a very long time.
If you use credit cards and find that you whip out the card for just about any purchase you make, why not stop and think about the possible consequences of those actions.