The debt that has been compiled by credit card users across the United States has now reached a staggering $1 trillion. This is a number that keeps going up with no sign of decreasing. This problem has been highlighted in a recent blog post written by financial tech entrepreneur Renaud Laplanche. He believes the root cause of financial problems for most Americans is the use of a credit card. He has mentioned several key issues with credit cards that he feels have led many people in the United States to financial ruin. Here are a few of the topics that were highlighted by him.
Renaud Laplanche has a very big problem with the fact that there are many American credit card companies that are charging their customers interests rates of 25 percent or higher. He feels this is outrageous and forces many people into extreme debt within a short period of time. The credit card companies want to get people in debt and keep them there. This is how they make money. They do not make money if people become financially responsible and pay off their balance. The high interest fees make it nearly impossible for many low income people to ever get out of debt.
Another reason Renaud Laplanche believes that people should stay away from credit cards is the fact that fees are charged for many things. Fees are another way that credit card companies pad their profit margins. There are many people who want to transfer a balance from one credit card to another. If they do that, they will need to pay a fee. There are also fees charged to people who do not make the minimum payment on time. Certain credit cards include an annual fee for the privilege of being able to use the card. This mountain of fees only makes it harder for people to get out of debt.
Incentives are a very big thing in the credit card industry. You have probably seen ads for credit cards touting discounts for shopping at various stores or offering certain amounts of cash back. The incentives on debit cards are not even close to those available for credit cards. This is because it is the goal of the credit card companies to get their customers to build up their balance buying items so they can get incentives. Many of these people will start carrying a large balance. This gives the credit card companies exactly what they want.
Renaud Laplanche is seeking to educate young people about the dangers of excessive credit card use. This is because credit card companies prey on young people who are naive about financial matters. The goal of these companies is to get college students addicted to paying for everything with a credit card. The likelihood of these young people paying off 100 percent of their balance every month is not very great. The credit card companies want to start getting these people involved in the cycle of debt very early in their lives and keep them there forever.