That credit cards and lines of credit are available everywhere where you can get them does not mean that your problems are solved. Rather you will only be compounding your problems if you take out credit without the cash to pay for them.
Even though credit cards are a useful financial tool, there 9 reasons as to why you should stop using them or at least minimize the amount you have. You can use cards to build credit, for fraud protection and other notable benefits. However, when you become irresponsible with your cards, it can lead to a lot of financial problems. Here I will be outlining the 9 reasons why you should say no.
Expensive Credit Card Interest Rates
Credit cards have high-interest rates. This can make financing your purchases quite expensive. Credit card companies charge interest rates on some cards which more than double that rate. Now when you borrow money at these double-digit interest rates it further sinks your situation.
Credit Purchases Makes You Over-Budget
You tend to spend more money when you are paying for your purchases with a credit card. This is because you are not paying with cash, thus it may not seem like a big deal to you. However, if you are paying for your purchases with physical cash, it gives you a better sense of both the cost and how much money you have left in your wallet.
Damages Your Credit Score
If you have a lower credit rating because of some unpaid credit card debt, then you are sure you will be paying even significantly more money in the future. You will be paying a higher interest rate when you are applying for an important loan, like a home loan. You may also not be able to get a loan in some cases.
Undisclosed Terms and Conditions
Even though you have actually read the terms and conditions before you sign up for a credit card, there will still likely be some things you are not aware of when it comes to using credit. The fine print will reveal that the company can increase at any point it’s interest rates, fees, penalties with as much as a short notice of up to 2 weeks.
Stresses You Emotionally
Interest Rates Can Increase When You Don’t Pay Off Balances
Understand that when you don’t pay off balances, the annual share charge (APR) that you thought you had in your bank card could have been an introductory charge header to improve if you are not steady in paying off in full. Although you may think that you’ll pay your balance in full as soon as it’s payday-like everyone else hopes for, you may get hit by life’s uncertainties.
Financing Purchases Can Lead to Bankruptcy
If you indulge in excessive spending sprees with no backup plan to pay them off in the event where life’s uncertainties hit you, you could end up hopelessly in debt. Declaring chapters will impact negatively your credit score historical past for up to 10 years. Even when the report finally goes away, you will have to start building a good credit score all over.
You Risk Your Relationships With Bad Habit
Research has indicated that couples and families fight about money more than any other thing. This can be an especially sensitive topic when there is not enough money. Thus couples and families are to work on budgets and financial self-discipline together whenever possible.
You Don’t Have a Budget
You need to budget the things you want to buy, even those small everyday expenses. This is very important because those overlooked small items can add up in a month and cause you trouble. With a credit card, you may bypass budgeting and be tempted to buy at the spur of the moment (impulse buying). You can avoid this problem by planning your expenses and writing everything down.
In conclusion, even though credit cards can come through on a rainy day, it can also cause one to have a rainy day. Thus if you know you can’t be responsible with credit, save yourself the trouble and avoid it, there are other options you can choose from.