Credit cards should be treated as small loans that have flexible terms. They are not treated as such. In normal circumstances, a borrower has a single loan with a determined amount. Blue Trust Loans are dictated by a core amount that is to be paid off in the short term. The terms are usually about three months to a year.
The numbers don’t just change. The loan limit is the same, and borrowers can get a new loan if they pay off the previous one. Aside from a few exceptions, this is a safe and practical measure for diminishing the chances of debt abuse and becoming over-debted.
How Credit Cards are Improperly Used
Credit cards are not used this way. People will add more debt as they simultaneously pay off debt. The result is a never-ending circle of debt, where the credit card companies feed off the various fees, surcharges, late payments, and everything else in between. Some credit companies may even charge for limit increases so borrowers can add even more debt to their loan.
It is a system that is oddly maligned but not generally seen as such. People have problems with credit cards, but there are well over 400 million of them in the United States alone. Clearly, there is a difference between What they do and the cultural acceptance of them.
The Appeal of Short Term Consumer Loans
Payday loans are also maligned, and sometimes fairly. Some providers will add bloated fees for late payments, but they are not always different from credit cards. But, the terms are usually determined at the forefront. Abuse is minimal especially when a borrower pays off the loan on time and only borrows a responsible amount. The loan will not just increase randomly after a few good payments. The loan is the loan, and this is a powerful distinction.
It is also the same determination made towards many payday loan providers. Payday loans are not perfect by any means, but the distinction that they are worse compared to credit cards may be a presumption based on how long credit cards have been considered normal.