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Culture of debt


Pretty clothing, fancy dinners, home improvements and peace of mind are some of the benefits that financial institutions advertise when selling credit cards. But is that accurate?

Like many countries around the world, everyone copies America. Americans seem to live in the lap of luxury but the dirty little secret is many of those luxury items you see were bought on credit cards including the trips to the Caribbean and many people can’t afford the items they purchase. {{more}}

It is a good thing that more Caribbean residents are finally obtaining access to credit cards. They are convenient especially when traveling internationally to purchase goods and services without having to carry lots of cash. Unfortunately, the convenience of carrying a card can be detrimental to the financial health of many families who do not understand how to use a credit card responsibly. You can end up paying twice as much for an item if you purchase it on your credit card and only pay the minimum monthly payment.

When you obtain a credit card you are agreeing with the credit card company to pay back in full all the debt you borrow regardless of your employment status. In order to maintain the privilege of having a card there are a few basics you need to keep in mind.

1. Credit cards are not free. Companies charge you to use their cards. There are lots of fees (Annual fees, transaction fee, interest rate and late fees) attached to credit cards, and they differ according to the type of credit card. Responsible credit card users are aware of all the fees.

2. Pay more than the minimum. The monthly bill states the minimum payment due. Always pay more than the minimum. This will decrease the amount of interest you pay on your balance. Credit card companies make money when you pay only the minimum.

3. Check your monthly statement. Verify your statement each month to make sure you made all the charges that are listed. Fraud is rampant and if someone obtains your credit card information they will probably use it to their advantage.

4. Keep all receipts. Your receipts from purchases will serve as a second record for your transaction in the event there is an error on your monthly statement.

5. Secure cards. Always keep your card in a safe location and do not lend to anyone, friends or family!

6. Lost or misplaced cards. Report lost or misplaced cards immediately, preferably within 24 hours. Keep a copy record of the front and back of all your credit cards, and the number to call to report lost or stolen cards in a separate safe location from your cards.