“The handy thing about credit cards is that they are a great way to pay off your credit cards”
True, that exactly happens with most of us, to pay off one credit card we use another and that is paid by another one. It creates a circle of payment with the credit cards and it continues. The credit card creates artificial and temporary solvency which you would not belong to us. It seems that we have the money and we can meet every demand at any time. But the consequence is that we have to PAYBACK that amount must and within a specific time limit and if we delay in payment then it instantly adds interest.
Here are some of the logical reasons why not to use credit cards
Living Without Budget
Budget means expending according to the earnings. If you can live according to your budget then you will never need a credit card. A credit card is needed when you want to expand beyond your income level. So, it would turn you back from keeping a budget, which is detrimental to your financial condition. A credit card supports you in your hard times, which is true, but with time, it will hurt you at a higher rate.
The Interest on Credit Card is Higher
It is a regular practice to offer for selling items on a credit card with monthly installments. If you purchase an item of Rs. 1,00,000 you will have to pay Rs. 1,20,000 overall when you end up paying all the installments. So, this is an unnecessary expense for you. Where the normal price is Rs.1,00,000 as a cardholder you will pay approx. 20% higher (Rs. 20,000 extra) than that and you are happy to pay the little amount every month instead of in a lump sum. That is a pity!
As a Credit Card Holder are you Self Controlled?
Restraining is at a time boring and beneficial for your life. If you are much unwilling to have self-control then it would create terminal great insolvency which will affect all of the necessary needs of you in later life. A credit card would keep open your hand all the time by making the false assumption of YOU HAVE MONEY. On the other hand, restraint behavior would help you in expanding the value amount in your difficult time. For example, when you go shopping with cash you have to feel a self-restraint power to control the cash management. But if you go shopping with a credit card you would buy as many as you want without much thinking, as the credit limit present on your credit card inspire you to buy many unnecessary things which are not required at that moment.
Credit Card Can Damage Your Credit Score
If you can’t pay installments of the credit card on time, then it will add to the unpaid balances and create a bad credit score. The unpaid balance of credit cards can also bring additional interest, so try not to keep any unpaid amount. If this situation of unpaid credit card payments continues for a few months, this will create a bad CIBIL score and that would affect your credibility. Your credit score determines your loan approvals and because of a bad credit score you may not apply for any loan and this can affect your daily lifestyle too.
Credit Card Can Increase Your Spendings
Many recent studies show that people who went shopping with cash and those people who are shopping with a credit card, people with a credit card always spend more money. This situation is good for the credit card companies and stores but probably not good for your bank account.
Reduce Peace of Mind
A credit card is good only in some urgent situations. Otherwise, if you spend your credit card limit on unnecessary things someday it can create a problem for you. If you are going through some financial problems and can`t pay your credit card payment on time it will create tensions in your daily life. All the time you will think about credit card payments and create unnecessary pressure on yourself.
You’re Not Financially Disciplined
It takes lots of self-control and patience to use credit in a disciplined way. Without these skills, you can easily spend yourself in debt, interest, and a poor credit score. If you know that you may be unable to control your spending, deciding to pass on credit cards is likely the best choice for your family and financial future
A lot of self-discipline is required to pay off your entire credit card balance month after month and to ensure that you keep your spending at a level you can afford. Even if you intend to pay your balance in full each month, there will always be some variables that can put you at risk for not doing so. Remember that without a credit card, you can never run the risk of paying interest, being charged late fees, or damaging your credit score.
They Come with Numerous Fees
While credit card companies make a lot of money on interest charges, they make nearly as much on fees also. If you make a late payment on your card, you can expect a hefty late fee. Sometimes if you go over your credit card limit, you will have another fee added to your bill. For a special-reward credit card, you may have to pay an annual fee. If you want to transfer a balance from one card to another, you have to pay a balance transfer fee. If you use your credit card outside India, you will likely find a foreign-exchange fee. So, if you are not careful with your credit card, it’s possible to pay more in fees than in interest.
Credit cards can cause a huge amount of financial damage if not used carefully. So, you need to understand how to avoid this damage before you apply for any credit card. If you think you can’t handle credit cards wisely then don`t get a credit card. Your finances will thank you for your decision.