Since the big credit boom began in the 1980s, many consumers have ridden the waves of opportunities offered by having a handful of credit cards and the ability to easily qualify for loans for home improvement or purchase, cars and even college educations. However, that same credit has also caused consumers plenty of grief, and only now are some individuals realizing that credit isn't always what's it's cracked up to be. Consumer credit also brings with it plenty of disadvantages.
Debt
Credit encourages consumers to spend money they don't have. Credit is convenient, but can also act as a trap for many who need to buy that car or pay that semester of school tuition even though they don't have ready cash. Debt can pile up fast, leaving many paying off the bills for decades.
Finance Charges
Depending on your credit score, you may have credit cards or loans with high or low interest rates or finance charges, which are added to your account balance for the privilege of borrowing that money in the first place. When you realize that you're paying $1 toward principal and $199 on interest or finance charges for a minimum $200 payment for a credit card, the benefits of having that credit card begin to fade quickly.
Stress
Many consumers up to their eyeballs in credit debt wonder if they'll live long enough to pay it off. Many work two jobs just to make ends meet, and the stress of not being able to pay off debt causes many to develop illnesses caused by stress, reports MSNBC.com. Ulcers, depression, anxiety and panic attacks are just a few of the symptoms that debt-related stress can cause for individuals.
Overspending
With a credit card with available balance on hand, it's tempting to make purchases that you wouldn't normally make without that credit card. Consumers today often purchase first and think later, especially when it comes to luxury or non-essential purchases.
High Debt-to-Income Ratio
Consumer credit often leaves individuals with a high debt-to-income ratio, which means the accumulation of their debt matches or exceeds what they earn on an annual basis. This scenario drops peoples credit scores, leaving them less likely to qualify for bank or creditor loans for major purchases such as homes.
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