Are Credit Cards Worth It?
When you are in a bind with money, credit cards can seem like the perfect option to turn to. They seem to offer you money right there when you need it. While it may be true that there are some uses for credit cards, the truth is that they are more of a hassle than they are worth. Not only do you pay more in the end on the item you bought, or bill paid, but, you also add more financial stress to your life. When possible, it is best to steer clear of credit cards no matter how good the deal may seem. There are other ways to build credit and pay for items.
What are the Cons of Having a Credit Card?
You are tempted to spend more
How many times have you been to the store and seen an electronic or clothing item and thought, if only I had the money? With a credit card, it may very well seem to you like you do have that money. You might even tell yourself that you will pay it off with your next paycheck. However, things come up and whether you intend to pay that item off immediately or not, they expect your payment.
You pay more than what the item costs
This is something that most people know about credit cards, but, have you ever really looked at how much the difference is? Take the time to calculate the interest and fees of purchasing that item with a credit card and see just how much you are actually paying. The difference can be quite large depending on what you buy. If possible, save up for the item you want. It will save you a lot of money in the long run.
You might short yourself at the end of the month
As stated before, you have no idea what expenses are going to show up at the end of the month. On the first of the month, buying a TV with your credit card may seem like a great idea. You may even have the money to swing the payments at the end of the month. However, what you may not account for is losing your job or having car troubles. These inconveniences can not only take away some of your income but can completely throw off your payment plans. The longer you take to pay off the item you bought, the more you are going to pay.
The terms and guidelines can be insanely confusing
How many times have you actually looked at all the fine print on something before signing it? If you're anything like a good portion of the world, the answer is rarely. The terms for credit cards can be long and confusing without looking up what every other word means. You may find yourself going against a term on your credit card that you didn't even know was there. If you are going to get a credit card, make sure you understand EVERY term and guideline provided in the fine print.
Misusing a credit card can hurt your credit score
This is probably something you have been warned about. Missing even one payment on your credit card can significantly reduce your credit score. Once you bring down your credit score it can be pretty hard to bring it back up again. It is much easier to bring your credit score down than it is to increase it. Make sure if you have a credit card that you are always paying what you are supposed to at the end of the month. Poor credit scores can damage your future investment options.
Are There any Pros to Using a Credit Card?
There are several arguments for why having a credit card is worth it. However, it is important to look at these pros and realize that there are still consequences lurking not far behind them. The best advice, if you do choose to open a credit card, is to be cautious of rules and regulations.
Ease and availability of money
While it may be very true that you can easily swipe your credit card at the store, ease and availability can go two ways. Being able to easily pull your card out and swipe it can end with you spending much more money than you have. With cash, you know exactly how much you are spending and what you have left.
Ability to shop online
There are other ways to purchase items online other than using a credit card. Use a debit card instead which limits how much you can use and charges you if you spend more than you have. This may not keep your spending habits in check, but it will keep you from paying much more for an item than it costs.
Building credit score up
Yes, your credit score can be built up as you pay credit cards off. However, your credit can also be seriously damaged by the misuse of credit cards. If this is the method that you use to build credit, be cautious. Make sure you are never spending more than you can comfortably pay even if emergencies arise.
You can get great deals! (rewards, no interest payments for a set amount of time, and so forth.)
You'll find that many credit cards off you deals that sound pretty great. For example, a credit card for a store may offer you no interest payments for six months if you purchase so much worth of product. As good as this deal may sound, they plan on you not being able to pay that money in time. Often, once the six-month period is up, you are responsible for paying all the back interest on that item. Be sure to carefully read all the rules and regulations on deals like this. Companies want to satisfy their customers, but they also want to make a profit off of you.