Why You Shouldn’t Get A Credit Card

credit-card-walletThere are some people who should never have a credit card because they are unable to manage it.

When handled properly a credit card can be a good financial tool. When handled carelessly a credit card can lead to financial disaster.

If you are going to use a credit card you should be able to pay off the balance in full each month. When you carry a balance from month to month you will be paying the credit card company interest on the amount you owe. A sale price is not truly a sale price when you figure in the amount of interest you need to pay on that sale item. When you are carrying a credit card balance you are not staying within you budget limits.

Young people who are carrying a large amount of student loan debt probably don’t need to add the expense of a credit card to their monthly debt load. They are already responsible for several hundred dollars in payment monthly for that loan.

A credit card is not a good idea if you have a tendency to overspend. It takes discipline to forego a purchase when you don’t have the cash, but you do have that plastic card. If you are an impulse shopper a credit card is probably not a good match for you.

A credit card is a bad choice if you are using it to live beyond your means. Using a credit card to finance something you otherwise cannot afford is a very bad idea and leads to financial problems.

Taking cash advances against your credit card to finance your lifestyle or a luxury is a huge mistake. Interest rates for cash advances are even higher then for purchases.

You should not have a credit card unless you truly understand how they work. You can study information online which can help you understand how to properly use a credit card.

30K-credit-card-debtThere are some myths that indicate you need a credit card in order to build your credit score. While it is true a well maintained credit card account is an easy way to build credit there are some other options to obtain a credit rating.

If you pay your rent and utility bills on time this will be positive for your credit. If you pay an auto loan on time this too will help your credit score.

There is also a myth that you need a credit card in order to rent a car. This is no longer true. You can use your debit card wherever you can use your credit card. However, some people choose to have a credit to use only for car rentals.

Using a debit card to make purchases online may not be the wisest choice. You can use a service such as Pay Pal or purchase a prepaid card to use for this purpose.

When you feel you are not able to properly manage a credit card you may want to use a debit card which takes the money directly out of your checking account.

You may want to purchase a prepaid debit or credit card. This way you cannot overspend. However, you will be paying a fee when you purchase a prepaid card.