There are many millions of people around the United States who are in very deep credit card debt. The problem seems to be getting worse with each passing year. Renaud Laplanche is a person who has built successful businesses in the financial sector. He is doing his best to educate people about the dangers of credit card use. He feels there are many negative aspects of credit cards. In his opinion, credit cards are one of the main reasons why so many Americans are in very bad financial shape. Renaud recently compiled a list of some of the worst aspects of credit cards. Here are the biggest problems that he pointed out.
The interest rates for many of the credit cards that are available in the United States are insanely high. Renaud Laplanche thinks that the interest rates that are being charged are similar to highway robbery. He feels that at the federal government should put a limit on the interest rates that are being charged by credit card companies. However, it does not look like it will be happening any time soon. The credit card industry has very powerful lobbyists who work for them in Washington. The high interests rates keep people perpetually in debt. Credit card companies will also go out of their way to bury the interest rate very deep in the fine print of the customer agreement.
Fees are a big way the credit card companies generate a profit. There are fees for a wide range of things. This is why Renaud Laplanche encourages people to thoroughly read the customer agreement before they sign it. This will allow you to know what fees they will be paying. This will prevent them from having any unexpected fees showing up on their monthly statement.
Renaud Laplanche feels the incentives that credit card companies offer to their customers are designed to make people use their cards more often. For example, the incentives offered on credit cards are always considerably more generous than those incentives offered for debit cards. This makes people want to whip out their credit card to make purchases for everything they buy so they will qualify for the incentives. Meanwhile, their credit card balance will keep getting higher. Therefore, they will need to pay more interest each month. It is all a system devised by the credit card companies to maximize their profits.
Perpetuating the cycle of debt is what credit card companies thrive on. They rely on people who are not financially responsible to make the majority of their profits. Ideally, they want people to start becoming addicted to credit card use when they are at a very young age. They prefer to have people sign up for credits cards as soon as they are legally able to do so when they turn 18. People who are still in their teens are less likely to make good financial decisions. They also make less money. This means they are less likely to pay off their monthly balance in full.