One of the dangers of our economy is that everyone has some debt on them today. Credit has become one of the cornerstones of most economies in the world today.
For example, the United States economy is highly built on credit cards. Most people hold at least one, and if you do, you likely have some form of debt racking up.
A large number of Americans today are finding it a little bit harder to pay off their credit card debt. While carrying high debt in some instances can be strenuous to your finances, it brings other dangers as well. Read on to learn about the four immense dangers of credit card debt.
1. It Damages Your Credit Score
The first risk you stand with walking around with credit card debt is that it ruins your credit score. When your credit score is ruined, your chances of getting lending services in the future will be destroyed, as well.
Almost all creditors will ensure that they have a look at your credit score before they can offer you any credit. Your credit score is the one that determines how much you get in terms of credit.
2. The Interest Makes It Harder to Pay Off Your Balance
The interest that accumulates alongside the debt on your credit card will make it harder to pay off. The more you carry over the debt, the more the interest rate continues to grow. With interest continuing to grow, paying off the balance will be harder.
You want to be able to pay the set amount of balance on your card without interest. Once the interest kicks in, though, you’ll need to pay it off first before paying the balance. This will undoubtedly add to the amount you pay off since the interest will continue growing as long as you have an unpaid balance on your card.
3. Your Wages May Be Garnished
You certainly won’t go to jail because you failed to pay off your credit card debt. But, the issuer can sue and have your wages garnished to pay off what you owe.
In the case that this happens, you’ll be losing a considerable amount of your paycheck that will be going to settle that bill. With this in mind, defaulting on your credit card can be dangerous and financially painful.
4. Your Financial Safety Net Will Be Ruined
You’re living in a financial house of cards if you aren’t paying off your credit card debt. Not only just paying it off, but doing it on time. You won’t have any amount to save if you have your credit card debt to take care of, as well.
That means that you’ll dedicate a few thousand dollars every month to pay off debt, which could have been money you saved for other life goals, like buying a house or car.
Conclusion
Living in some debt is more or less the way everyone conducts their financial lives today. But, that doesn’t mean that you should live in exuberant debt. You need to always ensure that you pay off your balance every month and fees every year. You should never get to a position where you’re walking around in credit card debt.