Page 37 - Book6E

American Express and Diners Club cards are also charge cards, rather than credit or debit cards.
Credit Cards
A Credit Card is called revolving credit, which means the balance does not need to be paid off in full each month. The balance that is carried forward is a loan and incurs interest. Credit and debit card usage now accounts for more than half of all purchases made. Credit card com- panies try harder and harder to entice consumers to use their credit cards by offering free gifts, rewards, cash back and even free gasoline. To compete, banks are offering new incentives.
It is estimated that American consumers are now $2.5 trillion in debt. That is an average of $8,100 per person (man, woman and child) in the United States. And if you're saying to yourself—that this statistic doesn't seem quite so bad—just keep this in mind: We're talking about consumer credit which does not include debt secured by real estate. So if you're thinking that number has mortgage values in it, it doesn't. There can be lots of positives about carrying plastic instead of cash. However, credit cards are only advantageous when used correctly. Credit card debt has become a major finan-
cial concern for millions of Americans. Avoiding it in the first place is much easier by exercising some self-discipline. Here are a few simple rules to follow:
1 . Choose wisely . Find out the Annual
Percentage Rate (APR) and if it is
fixed or variable. What is the grace period? What are the transac- tion fees? Look for any other charges like late fees and over-limit fees.
2 . Establish good spending habits . A credit card is not a free pass to spend money that you don’t have or will be borrowing. Keep a budget and know what you have available to cover expenditures.
Plastic Money 29
Debt is the worst poverty.
— Thomas Fuller