The Reality of Consumer Debt: You Are Not in Control of Your Finances

One of the realities of consumer debt is that once you are in it, you are not in control of your financial life. While borrowing money to help you pay for a home or a car or an education might be necessary, it still puts you in a position of servitude. You are beholden to someone -- and paying interest -- until the obligation is discharged. In the case of a home or an education, there are benefits that can outweigh the costs. This can be true to a certain extent when you purchase a car. However, if you bite off more than you can chew, then it doesn't matter how "good" your debt it -- it becomes bad and you can get into financial trouble.

Credit card debt and your financial life

These issues are magnified when dealing with consumer credit card debt. Credit card debt is higher interest debt. Additionally, the terms that you agree to are often more onerous than you think. And credit card companies can pretty much do what they want in terms of changing things around. This means that you are at the mercy of someone else's whims. This point was made abundantly clear in the recent consumer outcry surrounding Chase's decision to raise minimum payments.

Chase decided to up its minimum payment requirement from 2% of the outstanding balance to 5%. This means a more than double increase in monthly payments for some customers. The only way to avoid this increase is to agree to a higher interest rate. With some of these balances high, and with credit standards tightened to make it difficult to get a new card, many customers have no choice but to accept Chase's terms. And that means that they are not in control. An already difficult position has been made almost impossible.

While Chase's actions are clearly underhanded and dirty, they are legal. And it goes to show that credit card companies really do know what they are about. When we get into credit card debt, we hand over control to someone else. The only way to take back control is to pay off the credit card debt as soon as possible -- and avoid it in the future.