In today’s world credit and debit cards have become a must. Especially, credit cards have been the biggest necessity for people these days. People are doing so many transactions every day and for simpler activities for which they can even pay cash. We can truly say that their survival without credit cards is unlikely.
Every day there is a certain amount you might spend. It could be on fuel, groceries, and even for stamps. Now you may have this question of how much cash should I have? Well, that depends upon the transactions you do every day. Because in further we are going to discuss that credit cards might not be your true friend that you think.
They are no doubt so convenient and all the time with you for making a transaction. Even if you have no money, the credit card will make sure that you get or pay for the need. But these cards have also got a bad reputation for making people financially challenged. As a lot of people do not have financial understanding, they think credit cards might be a blessing for them. But even with so many benefits, there are still a lot of disadvantages that we are going to discuss.
Top disadvantages of credit card:
Making people think it is easy money:
People have this temptation when they have a credit card. They think it will be easy to pay after a month so why not spend and treat yourself. Of course, they are so much easy to use and you will never know that you have used them way too much. Your spending limit is crossed and now you are in debt. Even if you make a lot, there is no sense in spending way too much money from your credit card.
You might think it is free money but you will be amazed to see how much people pay when they are late in their payments.
Interest rates:
We all know that late payments mean you have to pay the interest rate as well. The thing you don’t know is that the interest rate is way too much. You won’t be able to get your credit back unless you pay the previous amount with interest. Just think that now you are in need and you don’t have cash. Sometimes these payments go way beyond that some people go into debt and have to take other loans to pay it off.
Credit card fraud:
It is one of the biggest disadvantages of credit card. It is easy to steal and use and people do not need your card for it. They can get the number from a receipt, or online hacking. They will use your card to increase debts on you and it takes a while to report. And yes, the bank helps you and ensures that you have to pay only for the things you bought. But, in some cases, if it is not possible to track the whole bill is on you. Make sure that you report immediately in such cases to the bank so they can track them out.
Credit score:
A credit card is no doubt the best way to improve your credit score. But think of it this way if you do all transactions on it and don’t have the money to pay it back? It will not only increase the interest rate on you but lower your credit score. So, it is important to protect yourself from this negative impact.
Too many credit cards:
A lot of people have kept so many credit cards and the reason behind it is the temptation. It can lead to no track of the payments and when the bill comes, you will be devastated with the result. If anything leads you to take a loan, how it can be good for you. You will have so many payments and deadlines and you might be late. If you keep this thing going go it can cause a negative impact and the bank will inquire about you.
But if you pay on time, there is no denying that it can help you in so many ways. People are enjoying its benefits and making sure that they only use it smartly. The temptation is real and it will only cause financial problems for you.
Debts:
One of the biggest reasons you should think twice before using a credit card is debt. There are so many examples that you might find in your friends and family. The debt is going to grow even if you pay it in small amounts. The interest rate is the reason why you should be scared of this debt. Your income will all go into these debts and there is no way you can manage the household and other expenses with these debts.
The credit score will start to decrease and in the future, no company will trust you for a credit card and loan.