Do you always have a credit card with you? Are you trapped in the terrifying clutches of credit card debts? What is your plan to repay them? Do you have any idea how much extra will you be paying? credit cards allow you to purchase in the present while paying for it in the future. Sounds fascinating, right? It isn’t so! The due payment is not the actual value of the product which you have purchased,
but a much higher amount because of the add-on fees and other conditions attached to the credit card you own. No matter which company you go for, personal loans are always better than credit cards!
Avoid Plastic! Know Why
The following are some significant reasons how credit cards can severely affect your life:
You might be thinking that you have opted for a credit card only for emergencies, but what do you do for your “just for once” desires? It starts with emergencies, small purchases & bills and goes on to special occasions, dinner parties and impulse shopping. It only stops when the credit limit is maxed out; leaving you in a pool of debts. There comes the point where you stop realizing the consequence of your actions. Think before you promise yourself anything & stick to it!
A False Sense Of Security
Credit cards offer a false sense of security as they make you think that it is your money. You might think that having a credit card is similar to owning an asset, but it isn’t so. If you have already fallen into the trap, then now is the right time to get yourself out because the longer you stay in, the more will be your debts. Credit card money shall always be considered as borrowed money, which is to be paid back with interest. You also have to take care of your cards because if someone steals it, he/she can destroy you financially. Do you prefer asking for money from your friends or family every other day to buy something? Of course, you don’t because it isn’t right. But with credit cards, you spend without any worries! Learn to save money for special purchases, and always prefer cash over credit!
Swiping Causes Overspend
Credit card money is easy money at first, right? Whenever you are out to buy something, you just have to swipe your card, and it’s done. No counting needed, no worries of carrying sufficient cash and no second thoughts required before buying anything, right? The primary reasons why swiping results in overspend. The fact that you don’t realize how much you have spent or are going to pay every week causes you to spend more than your means. It is believed that you are emotionally involved with your hard-earned cash & you think twice before spending it all, while with that plastic card, you just swipe in style and leave; making you purchase stuff that you don’t really need (sometimes)!
A Long List Of Fees
How do credit card companies make money? Interest, right? But do you know credit card interest is not the only source of income for them? There are tons of fees charged to your credit card transactions that you may not even know about, such as:
● Annual fees
● Late payment charges
● Financial charge
● Returned payment fee
● Over-the-limit fee
● Balance transfer fees
● Cash advance fees
● Foreign transaction fees
And many others.
The list goes on and on. The best way to get rid of such additional payments on your credit card transactions is to get rid of that plastic card right away.
Credit is not bad, credit cards are!
1. They damage your credit score
Do you know how much essential a good credit score is? Your insurance payment rate, jobs that you wish to land, a house that you want to rent, the interest rate for your mortgage and many other areas are affected by your credit score because a bad credit score means that you are more likely to commit fraud or are too irresponsible to pay back your debts. A bad credit score is the result of frequently unpaid or paid after the due date credit debts, which means that either you are incompetent to plan your expenditures or you are too irresponsible to care about it; whichever the case may be, it is not suitable for your future.
2. Huge interest rates
The interest rates for credit card transactions can be as low as 14% and can be as high as 40% of your spend. Why would you pay 14-40% extra for something you don’t need or is not worth the value after you add the interest amount? Credit cards encourage you to make the easy purchase in the present while your future-self might regret it after realising the debt.
3. They Encourage Impulse Purchase
The interest rates with personal loans are not very low either, but credit cards promote impulse purchase while personal loans and cash encourage important purchases only. The fact that you just need to swipe a plastic card to buy anything under your credit limit makes you think that why not! You can buy anything you think you need, even when you don’t actually need it. With cash, you think before you buy anything, but with credit cards, you buy first and then think (sometimes not even afterwards). These impulse purchases only lead to substantial credit debts and a bad credit score.
Also Read: Check your credit score in 5 easy steps
Stop Swiping Plastic Cards; Go for Personal Loans or Cash Instead!
About Renier Botha:
Renier Botha is the owner of Finance 27, one of South Africa’s leading online payday loans companies who offer some of the fairest rates in the market. He has a wealth of experience working in finance and as managing director of a hugely successful nationwide business.