I am sure many of us are using credit cards. It has become an essential part of life. Be it online shopping, shopping in a mall or paying restaurant bill or utility bills. Everywhere credit card is useful. In the previous blog ‘5 Reasons You Should Have a Credit Card – PolyBlogger.com’ we saw the reasons to have it. But now we will see nine reasons to avoid using credit cards. I am not saying you should not have a credit card or you should not use it. All I am saying is to avoid using it as much as possible.
Besides having the usefulness of having credit cards, there are consequences of having it. If we control at some times, we may enjoy the benefits of having credit cards with us.
Let’s study these nine reasons why should we avoid using credit cards.
The Temptation of Credit Cards
As soon as we receive our first paycheck, banks and financial institutions start reaching out us. They offer enticing credit cards with fancy names. These include reward cards, fuel cards, travel cards, and many more. They lure us in with attractive benefits. For example, some cards offer flat 5% cash back on online shopping. These offers can be very tempting, leading us to choose a specific credit card. It also lures us to spend where it is unnecessary.
While these benefits can ease our financial burden slightly, we must understand the potential downsides. Keep reading to gain valuable insights into managing your finances effectively.
The Importance of Financial Control
At www.PolyBlogger.com, we emphasize one keyword: “CONTROL.” This blog will help you understand how to take control of your finances. By managing your finances wisely, you can save money and even generate more wealth. Controlling your spending can prevent you from borrowing money, leading to a happier life.
Remember, the lesser the debt, the better the financial and mental health.
Now that you know the importance of control, let’s explore the nine reasons to avoid credit cards.
Unnecessary Purchases
Avoid using credit cards for items you don’t truly need. Use your cash. When you realise you don’t have it, automatically you will avoid or delay buying it. If you can’t afford to pay in cash, reconsider your purchase. Luxury items can lead to increased future expenses. For instance, buying a luxurious lifestyle using a credit card may raise regular expenses and maintenance costs. Only buy luxury items if you can afford the ongoing expenses.
Warren Buffet a billionaire mentions ‘If you buy the things you don’t need, soon you will sell them to afford the things you need’.
High Annual Fees
If your credit card has a high annual fee, consider switching to a different card. Many credit cards offer zero annual fees. It’s wise to choose a card that doesn’t burden you with unnecessary costs. If no such card is available or the service provider is not offering you the same, avoid using the credit cards.
Evaluate Savings
Check if your credit card provides significant savings. Look for cash-back offers, fuel surcharge waivers, and dining benefits. Ensure the card is widely accepted in stores. If it doesn’t save you money, it may not be worth keeping or using it. Avoid such credit cards and purchases.
Existing Debt
Avoid using the credit card if you already have an outstanding balance. Accumulating more debt can lead to financial trouble. Focus on settling your existing dues before making new purchases. Credit cards often lure us into making such purchases that add more debt.
If you are already struggling with debt, refrain from using credit cards. Delay purchases or pay in cash. This will help you manage your finances better. High debt means higher EMI (Equated Monthly Instalments). The majority of your earnings may go towards repayment of debt and interest. You may end up with no money in your pocket to repay credit card bills if you use a credit card in such cases. Avoid using credit cards.
The simple reason is, that if you won’t be able to pay the credit card dues, it will impact your national credit score in your respective country. In India, that individual credit score is called as CIBIL record. Heavy charges such as late payment fees, default charges, interest as high as up to 5%, loss of accumulated points and discounts etc. will be imposed. Avoid using credit cards in such scenarios.
Limit the Number of Cards
If you have one or two credit cards, avoid applying for a third unless absolutely necessary. Only get a new card if a vendor only accepts that specific type. Choose cards that are widely accepted both in your country and abroad.
If you want to pay the fee for a course offered by a foreign institution, you may have a credit card that can assist you. If it is of one-time use, you may take the help of relatives having that credit card. Pay him first and then ask him to help.
Sometimes you may even forget to pay the bill due to more than two credit cards with you. You will end up in trouble. So, avoid multiple credit cards.
www.PolyBlogger.com does not recommend having multiple credit cards unless it is necessary. Multiple credit cards can only lure you to spend more money from your pockets. Each card will have an annual fee. More cards can lead to more (sometimes unnecessary) buying. All this can only lead to increased expenditure whereas one or two cards (maximum two recommended) with all the necessary benefits can relive your life. So multiple credit cards are not recommended.
No Benefits from Usage
If you aren’t receiving any benefits from your credit card, don’t use it. Why give advantages to credit card companies if you aren’t gaining anything in return? By returns I mean, cash-back offers, discounts, good points useful to pay future bills, free airport lounge facilities for domestic and international travel, free memberships to certain clubs, bonus points etc. Otherwise, avoid using credit cards.
Avoid Unnecessary Spending
Be cautious of offers that lure and require you to spend more to receive discounts. Spending an extra $49 to get a discount may not be worth it. If the offer doesn’t align with your needs, ignore it. For example – if the discount is a massive 30%, but that thing is not needed for you it is best to avoid it. Otherwise, to earn a 30% discount, you may spend $200. Also, that discount many times, is worthless because it is on old stock or the discount loss is already factored in. Avoid credit cards in such cases.
Conclusion
In conclusion, while credit cards can offer convenience and benefits, they also come with risks. By understanding these nine reasons to avoid credit cards, you can take control of your finances. Remember, financial control is key to a secure and happy life. Thank you for reading, and stay tuned for more insightful financial tips!
