Why Not to Use Credit Cards
Credit card purchasing has become the norm in today’s society. Credit cards can be helpful, especially when you needs to make large and necessary purchases at a time when cash is not readily available. Unfortunately, the use of credit cards when you can’t afford the purchase can become a financial burden, especially when interest rates, late fees and overcharging are factored in and you are not able to pay what you owe.
For these reasons, we’ve compiled some reasons why credit cards aren’t always the best option, as well as some smarter alternatives for purchases.
Reasons to Avoid Credit:
Risk of Debt:
Credit cards can be disastrous because they are quite easy to use. People often start off using them to charge large expenditures, with the idea that they can now afford the item because they will be making low monthly payments. However, with high interest rates accumulating each month while the minimum pays are being made, the balance can continue to increase and you will ultimately wind up paying more for your purchase. Not to mention, if you miss or make a late payment, you will be charged extra fees and maybe a higher interest rate.
Temptation of Spending:
If you like to shop, having a credit card can easily sway you to make unnecessary, large purchases that you cannot afford. With cash or debit, you are less likely to overspend because you are working with a finite amount. Cash spending is generally more thought out while credit card spending tends to be more impulsive. If you can’t control the spending, bring only cash on your shopping trips..
Peace of Mind:
The worry and stress caused by the inability to pay bills has deep impacts on your life, relationships and ultimate health. Worrying about late fees, interest, annual fees, and your overall debt can easily put a damper on your happiness. If you pay with cash, you will have less stress regarding money you owe!
These are just four negatives aspects of using credit cards! Consider these safer options:
It is easy to underestimate how much you’re spending when swiping a card. However, if you use the old-fashioned method of spending cash, you will become more aware of how much you are spending. You will be able to limit how much you spend! I suggest bringing a pre-budgeted amount of cash with you when you go shopping to ensure that you do not spend more than you intended. Most purchases like gas, food and healthcare related items can be bought with cash since those items have no need for warranty or return.
Rewards Debit/Pre-Paid Cards:
When using a debit or prepaid card, you are spending your own money, either preloaded or from your checking account. This is similar to using cash but with some of the same benefits and protections of credit cards. There are also rewards debit cards that will pay you 1 or 2% cash back on purchases if you continue to maintain a certain amount of money in your bank account. Shop around when picking out a debit or prepaid card to make sure you are getting the best rewards and are not getting charged any fees!
Avoid getting into a rut by determining a reasonable amount of money that you permit yourself to spend for the week. Calculate the cost of necessities, and some other things you may want, and prioritize what is most important. The other stuff can wait!
You can always put prepaid amounts on store or gift cards and manage money that way if you prefer not to use cash or your debit card. This too helps with your budget and spending.
It can be easy to get off track when it comes to budgeting and managing your money, especially when you are supplementing your income with credit cards. However, the smallest changes in both mindset and habits, can work wonders for your finances!