Why You Should Avoid Credit Cards

Credit cards can make spending convenient and easy. The concern is that it can be too easy and convenient that people sometimes get carried away with credit card use. That is when problems start to arise, and card users fall into debt. 

Unfortunately, the idea of being able to quickly make purchases is often enough to convince people to get a credit card without realizing the potential financial pitfalls. Anyone who is considering getting a credit card should first know how those plastic cards can be detrimental to one’s financial health and, therefore, should be avoided as much as possible:

Credit Cards Can Damage One’s Credit Score

A person’s credit score dictates more than what the mortgage interest in the future will be. It affects the rate for insurance, one’s ability to be approved as a tenant, what jobs can be obtained, and more. Because of how credit cards affect one’s credit score, anyone thinking of getting a credit card should think multiple times before doing so.

Credit Cards May Come with Universal Default

Universal default states that if someone makes a financial mistake and it is included in the credit history, the credit card company has the right to increase the interest rate to the highest level, whether or not the problem on the credit report is associated with credit card usage or not.

Credit Card Companies Charge High-Interest Rates

Many investors would not think twice about the opportunity to get a guaranteed yearly return of 15%. Credit card companies charge interest rates on some credit cards that may be more than twice that rate. If a person borrows money with double-digit interest rates, it will be bad for that person’s finances. Interest is only good for the ones collecting. That’s not the case for the ones paying. 

Credit Cards Come with Various Fees

It is not only on interest charges that credit card companies make money. Not many realize that credit card companies earn as much if not more on fees. For instance, every late payment comes with a hefty late fee. If the credit card user exceeds the limit for the card, there will be another fee added to the bill. There would also be annual fees as well as fees for transferring a balance from one card to another. These are just some of the fees that not many credit card users know about when getting a card.

Credit Cards Encourages Impulse Buying

Here is the thing: a person who uses cash won’t be able to buy something without enough money for that purchase. With a credit card, on the other hand, there is no reason for that person not to swipe and take home a product. Unfortunately, many do not realize that the product still has to be paid for, not now, but the following month or months. Many fall into the trap of swiping a credit card mindlessly and drowning in debt in the future.

Conclusion

These are just some of the reasons credit cards are best avoided unless completely necessary.  While it cannot be denied that credit cards can be useful, one has to be strict with the way the card is used. Purchasing using credit cards should be done responsibly or the user might find themselves deep in credit card debt.

Anyone who is having difficulty paying off their debt will benefit from getting sound advice from DebtHelpers.ca, one of the best debt consultants in Canada. We offer debt solutions tailored to our clients’ needs. Get in touch with us today and take your first step towards becoming debt-free!