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Beware debt created by credit card use

Ohio residents may be struggling with credit card debt and facing the prospect of bankruptcy as a result. Whether people are using credit cards to pay for necessities or to live above their means, there are a number of facts about the real cost of credit cards that might make people think twice about using them too freely.

One thing individuals should consider is the psychological effects of using credit cards. Whatever a person's income level, credit cards give them the expectation of a higher standard of living, and that standard cannot be maintained indefinitely by going into debt. Credit cards are no bargain either. In fact, the inflation created by a credit card could be higher than 10 percent. Using credit cards also affects the potential for future growth; at some point, household funds are going to have to go back toward paying off those cards. It is money that is already spent before it is earned in the first place.

Using credit cards may create problems for the future in other ways as well. The debt burden may leave no cushion for future hardships like job loss. This debt affects people's permanent well-being. The future becomes something to dread rather than something to look forward to, and eventually, individuals may lose homes and families due to the stress caused by growing debt.

Whatever the reason for overusing credit cards, personal bankruptcy may be an option. Bankruptcy may offer individuals a chance to clear the slate and get back on their feet again after a period of unemployment, medical issues or simply mismanagement of finances. An attorney might be able to assist in working through the complex issues surrounding debt and bankruptcy and suggest the best course of action.

Source: FOX Business, "The Side Effects of Credit Cards", Richard Barrington, June 05, 2014

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