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Date Published : Monday, January 07, 2008
Consumers should take a serious look at their financial situation before taking out a credit card to avoid debt problems in the future, a financial expert has claimed.
After reports that one Australian successfully applied for a credit card under the name of his cat, a number of financial insiders are warning that applying for credit cards is now too easy - and leading to rising debts as a result.
According to Yahoo!7's Barefoot Investor Scott Pape, consumers should only take out cards with the amount of credit they need, rather than picking cards with the largest credit limit possible.
To avoid credit card debt in the future, using a credit card only when it is necessary and implementing personal discipline is advised.
Mr Pape suggested that banks are bringing out a wide range of credit cards to match a variety of personal circumstances.
"The pre-paid cards [are alternatives], the visa debit that uses your own money and that teaches the younger generation not to get stuck in credit."
However, Mr Pape claimed that it is nearly impossible these days to avoid using credit cards and that, as a result, some consumers will find themselves stuck in debt. While cancelling the card should not be necessary, the expert does suggest another drastic way to avoid adding to debts.
"The other suggestion is to cut up the credit card. It is the easiest way to get back on track."
Compare your current credit card rates with Australian providers.
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