Credit cards have become standard in the modern life, and they do have a purpose in the finances of many people. They are a tool, if used correctly, to improve your credit score. This can mean that you are offered better products in the future, in terms of finance and the rate of interest you will be charged.
But there are more reasons as to why you shouldn’t be using them with which to pay your bills and to get by each month.
- Having a credit card can be an easy way to purchase goods and to worry about the cost later. But in truth if you pay your credit card company interest payments then you are paying a higher price for the goods.
- Sometimes when you buy items on a credit card you can still be paying for the goods even after you have thrown them away. This doesn’t make good financial sense.
- If you are finding that towards the end of the month you have run out of money and you are looking to find ways to pay for essentials. This is a warning sign that you need to take immediate action and work out where your money is going each month. You need to work out a budget.
- Many people are not aware of the true value of money, it is too easy to put your credit card into the machine and not realise how much you are actually spending.
- Having a lot of credit in your name can cause stress. This is a worry that can build up trying to work out how to pay for the bills. Credit card companies are there for you when they want you to increase your spending to pay the bills, they will add charges to your account making the total amount that you owe increase month upon month.
Credit cards are relatively easy to come-by, banks and shops are ready to give you ‘free’ money to spend on the goods that you want. What they forget to mention is the amount of interest that it is going to cost you, or the length of time that you will need to be free of the debt.
How to avoid credit card debt
If you don’t want to get into debt with a credit card the best way to avoid this is not to have one. You won’t be tempted to spend money that you haven’t got on goods and services that you might not really need.
If you want to get by without running out of money towards the end of the month, then your only option is to learn to budget. Only when you learn the skill of creating and sticking to a budget, will you manage your money better. If you are able to split the amount of money that you have each month so you have a set amount each week, it will mean that you will have the same amount of money for the last week of the month as what you have at the beginning. If you can manage this, it makes life easier and you don’t have to rely on credit cards.
If you spend money on the credit cards you will then need to find this extra money in your next month’s budget which, you will need to use to pay off this extra expense. This means that you will be requiring even more money and is the reason why you are finding it difficult to budget your money.
If you are good with money and you are able to pay off a credit card bill each month, there are some great cards that offer cash back incentives. These can be great; they can give you money back for purchases that you would have naturally made. Just make sure that you are able to pay off the bill each month because they are not worth it if you are then paying interest on the cost of the item, it cancels itself out.
However you feel about credit cards you need to be cautious when you use them for purchasing goods and services, you don’t want to be paying interest on these items. It is not good for you or your wallet.