Hearing the word “debt” always makes you picture something bad, a burden, or an expense that you could not take care of. Surprisingly, there are good and bad debts although a debt always means that you owe money to someone in some way.
Yes, you heard it right, there are good debts too. These are the debts that let you get hold of appreciating assets such as a business that can later grow to improve your financial standing.
However, there is nothing good about credit card debt. In fact, this is one type of debt that is always considered to be bad regardless of the amount or terms and conditions involved. Bad does not imply that it does not deliver anything valuable. If the debt lets you cater to emergency expenses then we are sure that you need it but, in any scenario, it is best to avoid bad debts.
Now that we have made our point, let’s quickly discuss how credit card debt can be troublesome.
Credit Card Debt Does Not Buy Appreciating Assets
One reason why it is listed as bad credit is because the credit card debt goes towards the purchase of thinking like clothing items, gadgets, food, etc. None of these count as appreciating assets so they do not hold much value in the long run.
You can avoid this by not spending too much credit limit on things that won’t go up in value. This does not imply that you should cut down credit card use altogether. Simply use this beneficial more responsibly if you wish to achieve the best results.
Interest Rates That Can Sometimes Be Quite High
The worst part about credit card debt? They come with double-digit interest rates. This means you won’t only be paying off the amount that you borrowed but additionally you would have to pay APRs that can amount up to a lot depending on the card that you are using.
Paying Off Minimum Debt Can Take a Lifetime
The last thing we have to talk about is the minimum payments and how long it will take to clear them? Your credit card statement will give a clear idea about how many months it would take to make only the minimum debt payment. Furthermore, you can check out a trusted what is a consumer credit report to see your credit score and how much debt you currently have.
Did you know that you can get a free credit report online? Innovis free credit report can give you all the important information about your credit history that is safe and reliable.
Talking about a typical credit card that has a minimum payment of $160. If you have a balance of $8000 with an 18% interest rate, it would still take you more than 7 years to pay off the credit card. This is one major reason why experts strongly recommend against carrying bad credit card debt.
To live a debt free life i would suggest you to not take out a lot of loans. But if you are thinking of taking a loan with good rates then i will suggest Discover personal loan with low interest.
In a nutshell we can see that credit card debt is termed as bad debt because of high APRs and the fact that it would take a long time to pay off even the minimum amount. Therefore, we suggest that if you wish to make the most of your plastic then stick to paying the balance in full each month. In this way, you can use the credit limit and enjoy the rewards without worrying about incurring debt.