For many people in 2012, carrying anywhere from a little to a lot of credit debt is accepted as a completely normal way of life. While there are worse habits out there, carrying credit debt is one you absolutely should take care to avoid as part of good money management skills. Credit debt can be very harmful and expensive for you. Here are a few reasons why.
Dangers of Credit Debt
First and foremost, holding credit debt can be a huge stress on many people. Paying interest rates close to 25% on items you can’t afford to begin with is no walk in the park. These interest rates will only continue to accumulate until, in some cases, you are paying more interest than the cost of the items you charged in the first place! We don’t have to tell you that there are better ways to spend your money. Good money management skills start with keeping credit debt somewhere between very, very low and none!
Also, having credit debt will ruin your credit score. The more credit debt and the longer you carry it, the worse your score. A low credit score means you will have trouble getting loans or mortgages you might need later on down the line. Also, if you can get loans or mortgages, you’ll end up paying a lot more interest and having a lot less flexibility than you would if you didn’t have credit debt.