Loans and Credit Cards

Loans and Credit Cards
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Loans and Credit Cards
Loans and credit cards have become popular means for survival for people who believe
that they cannot survive without borrowing money from financial institutions. It is agreeable that
loans help people to manage emergencies and invest in projects that require a lot of money.
Moreover, loans and credit cards enable people to get easy and quick money for various reasons.
However, loans and credit cards are not necessary and people who abstain from these services
avoid extra expenses and disappointments associated with being in debt.
The money borrowed through loans and credit cards is usually repaid with interest.
Sometimes the interest charged on these debts exceeds the benefits of borrowing money from
financial institutions. In addition, the high interest charged on credit cards and loans debts may
sometimes be unreasonable and unmanageable. Failure to repay the loans and interest may attract
further penalties including additional fines. Some credit card companies provide an interest-free
period within which a borrower will not be charged interest for using the facility (Emekter, Tu,
Jirasakuldech, & Lu, 2015). However, this period is usually short and does not have a monetary
benefit to the user. In addition, the high rate of inflation and economic instability may force
financial institutions to adjust their interest rates compelling borrowers to pay higher fees for
using credit cards and loans. People who abstain from using credit cards and loans do not have to
worry about being in debt and incurring unnecessary expenses.
Secondly, living a debt free life enables people to focus on their lives and careers. Having
a loan is stressful and failing to pay one gives people depression and other health risks. There are
numerous disappointments associated with knowing that an individual owes institutions money
(Bhutta & Keys, 2016). Sometimes, uncertainties happen and render people jobless or limit their
sources of income. During unpredictable situations, people may fail to repay their loans on time.
Sometimes people may not be in positions of repaying their loans and this automatically attracts
heavy penalties. The fear of being harassed by loans officers or property being repossessed by
financial institutions as a result of failure to repay a loan makes people stressed. People cannot
concentrate on their daily activities if they do not have the peace of mind. Abstaining from loans
and credit cards is the best way of managing stress and disappointment brought by carrying loads
of debts.
On a positive note, loans and credit cards may be useful in situations such as emergencies
or when a person is supposed to raise a lot of money for financing huge projects. It is not easy to
save money and keep it idle for use during emergencies and that is why loans and credit cards are
appropriate services (McAndrews, Sarkar, & Wang, 2017). However, people who take loans and
use credit cards should have effective and efficient financial management skills to avoid making
impulse or unnecessary spending. It is wrong to live lifestyles fully financed by loans and credit
cards. People should learn to save and control their spending habits so that they can minimize the
need for loans.
Everybody wants to live a stress and disappointment-free lifestyle. Having a loan is an
unnecessary burden since it makes people worry a lot about repaying the debt. The high interest
charged on the money borrowed through loans and credit cards is an unnecessary expense that
should be avoided. People should learn to save money for various purposes instead of wasting it
and rushing to take loans or use credit cards when they have emergencies. Individuals who
abstain from loans and credit cards live simple, stress-free and affordable lives.
Bhutta, N., & Keys, B. J. (2016). Interest rates and equity extraction during the housing
boom. American Economic Review, 106(7), 1742-74.
Emekter, R., Tu, Y., Jirasakuldech, B., & Lu, M. (2015). Evaluating credit risk and loan
performance in online Peer-to-Peer (P2P) lending. Applied Economics, 47(1), 54-70.
McAndrews, J., Sarkar, A., & Wang, Z. (2017). The effect of the term auction facility on the
London interbank offered rate. Journal of Banking & Finance, 83, 135-152.

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