Which of the following is a disadvantage of credit card debt Quizlet?

The High Price of Convenience: Why Credit Card Debt Can Be a Financial Nightmare

Credit cards offer undeniable convenience. From online shopping to travel bookings, they provide instant purchasing power, making it easy to acquire goods and services without immediate payment. However, behind this allure lies a potential pitfall: the insidious nature of credit card debt.

One major disadvantage of credit card debt is the ever-increasing interest charges. Unlike other forms of borrowing, credit card interest rates can be exceptionally high, often exceeding 20% APR (Annual Percentage Rate). This means that failing to repay the full balance each month results in accumulating interest charges, turning a small purchase into a significant financial burden.

The problem lies in the cycle of escalating debt. As interest accrues on the outstanding balance, the overall amount owed increases. This forces consumers to pay more each month just to cover the interest, leaving less room to reduce the principal. This vicious cycle can trap individuals in a spiral of financial strain, leading to missed payments, further penalties, and a worsening credit score.

The consequences of failing to manage credit card debt can be severe. It can lead to financial instability, strained relationships, and even legal issues if the debt goes unpaid. In the worst-case scenario, it can even result in bankruptcy, a devastating blow to personal finances and future creditworthiness.

While credit cards offer convenience, it’s crucial to approach them with caution and responsibility. Always make full payments on time to avoid accruing interest. Track your spending diligently and make sure your credit limit reflects your ability to repay. Remember, credit cards are a powerful tool, but they should be used wisely and responsibly to avoid the potential pitfalls of debt.

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