Using a credit card for gas, groceries or other purchases is a convenient way to pay if you're short on cash. If you're not paying your bill in full each month, however, it doesn't take long for credit card debt to add up, and paying off a large balance can take months or even years. The next time you're tempted to pull out the plastic, consider the many disadvantages of credit card debt.
Interest and Fees
Credit card debt can include high interest and hefty fees. The more you must pay in interest and finance charges, the harder it will be to get out of debt. For example, if you owe $3,000 on one card with an 18 percent interest rate and you make only the minimum payment of $60 a month, it'll take you just over seven years to pay off the balance, according to Bankrate.com. On top of the interest, you may have to pay fees for cash advances, balance transfers, late payments or annual card membership.
Impact on Credit
Your credit score gives lenders an idea of how well you manage your money. If you owe a lot of credit card debt, it can hurt your score. According to myFICO, 30 percent of your credit score is based on how much you owe. If your credit cards are close to or at their limits, you might have a harder time getting approved for new loans or lines of credit.
Impact on Goals
If a big chunk of your income is going for debt repayment each month, it is harder to save and work toward your other financial goals. The longer you stay in debt, the longer you may have to defer your dreams of owning a home or saving for retirement.
Getting into credit card debt can impact you negatively in the long term. If you can't keep up with your payments, your accounts could be reported as delinquent, and that could hurt your credit. Your creditors could sue you in small claims court and even garnish your wages or your bank account to obtain payment. In a worst-case scenario, you could end up having to declare bankruptcy if your credit card debts get too out of control. Filing for bankruptcy gets rid of the debt, but it can hurt your credit for years to come.
Rebecca Lake is a freelance writer and virtual assistant living in the southeast. She has been writing professionally since 2009 for various websites. Lake received her master's degree in criminal justice from Charleston Southern University.