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Credit card debt -- a necessary evil that can lead to bankruptcy

Apparently, many millennials in Ohio and elsewhere are shying away from the use of credit cards. Mountains of student loan debt may be one reason. It also may be a response to the fact that many consumers sought bankruptcy protection during the recent recession because of overwhelming credit card debt.

Millenials seem to prefer debit cards and cash rather than credit cards. While some regard credit cards as the root of most financial problems, it is also seen as a necessary evil with unique features not shared by other payment methods. Some of the advantages of credit cards include extended warranty protections at no extra cost for products paid by credit card. Many cards offer travel insurance, cash back deals, reward points and more.

The consumer's ability to make timely payments and his or her use of any cards helps to build a favorable credit history. This comes into play in job applications and loan applications. Also, landlords may judge a person's fitness to rent by what is recorded in his or her credit history. One's credit score also plays a role in interest rates charged on car loans and mortgages, and it can even affect insurance premiums.

In Ohio and elsewhere, getting a credit card is a significant financial benefit -- even it it is just one card that is used infrequently. As long as the card is managed responsibly and the full amount is paid every month, interest will not accrue. When only minimum amounts are paid, the accumulated interest can become overwhelming within a short time. Fortunately, help is available through the protection offered by the U.S. Bankruptcy Code that allows the discharge of unsecured debts such as credit card debt.

Source: consumerreports.org, "Debt Shy? Why You Should Still Get a Credit Card", Tobie Stanger, Aug. 24, 2016

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