In terms of financial advice, which is generally recommended to avoid?

In terms of financial advice, which is generally recommended to avoid?

• A. High-interest credit cards
• B. Low-risk investments
• C. Certificates of deposit
• D. Emergency funds

Answer: (A)

High-interest credit cards are generally recommended to be avoided in financial advice because they can lead to significant debt accumulation. When individuals carry a balance on these cards, the high interest rates can result in monthly payments that only cover interest rather than reducing the principal amount owed. This can create a cycle of debt that is difficult to escape. In contrast, low-risk investments, certificates of deposit, and emergency funds are considered sound financial practices. Low-risk investments typically offer more stable returns with less chance of losing principal, while certificates of deposit (CDs) provide a guaranteed return after a set term, which is a prudent way to save and invest. Maintaining an emergency fund is also a cornerstone of financial security, as it allows individuals to cover unexpected expenses without resorting to high-interest borrowing. Thus, the recommendation to avoid high-interest credit cards is rooted in protecting financial health and promoting sustainable financial management.

High-interest credit cards are generally recommended to be avoided in financial advice because they can lead to significant debt accumulation. When individuals carry a balance on these cards, the high interest rates can result in monthly payments that only cover interest rather than reducing the principal amount owed. This can create a cycle of debt that is difficult to escape.

In contrast, low-risk investments, certificates of deposit, and emergency funds are considered sound financial practices. Low-risk investments typically offer more stable returns with less chance of losing principal, while certificates of deposit (CDs) provide a guaranteed return after a set term, which is a prudent way to save and invest. Maintaining an emergency fund is also a cornerstone of financial security, as it allows individuals to cover unexpected expenses without resorting to high-interest borrowing. Thus, the recommendation to avoid high-interest credit cards is rooted in protecting financial health and promoting sustainable financial management.