Why Having Credit Cards is a Terrible Idea

Credit cards have made people’s lives easier and more convenient than before.  A lot of day-to-day transaction-based activities are even difficult or impossible if you don’t have a credit card.

But despite their usefulness and handiness, credit cards also get a bad rap. This is why you have to brush up on your financial literacy and have a proper understanding of the benefits and drawbacks of plastic.

Below are some of the common reasons why having credit cards is a terrible idea:

Credit Cards Come with Annual Fees

Most credit cards today have annual fees. People often forget about it, not realizing that this is who banks can afford to give away temporary loans to now and then. Once the annual fees and interests add up, things can get more expansive than you imagined.

Credit Card Fraud is Rampant

Credit cards can also get stolen just like cash. These cards can be stolen physically or someone may even steal your credit card number over the phone, from a website, or a receipt. These people can end up using your card on different transactions.

However, there is still a silver lining here because, unlike cash, once your credit card number or the card itself gets stolen and you reported it to the company right away, you won’t be charged for the thief’s purchases.

It Can Lower Your Credit Score

If your credit card has higher balances and you fail to pay these every month, it might lower your credit score. Maintaining your balances close or at the maximum available credit can negatively affect your credit score.

Credit Cards Incur High-Interest Rates

Most credit cards also charge extremely high-interest rates which can get quite costly if you fail to pay off your full balance every month. Aside from this, once you get a loan using your card or you repaid your balance a bit late, you might be facing some steep interest charges, typically 24% to 36% every year.

Multiple Cards are Bad News

Giving in to the temptation of having several credit cards might make you lose track of your payment deadlines and details. It can spell disaster because it also creates a false sense of security. There is also the possibility of transferring accounts to lower-interest services that might increase your payments if you pay late.

Credit Cards Create the False Sense of Easy Money

Probably the most terrible thing about credit cards is none other than the temptation. Since these cards are easy to use, it also makes it easier to spend more money you don’t have in the first place. Although it might feel like you are getting free money, you still need to pay it off later. if you wait longer and you owe more money, the interest will only pile up further.

Don’t become a victim of credit cards. Use your plastic wisely to ensure that what was meant to make your life easier will end up wreaking havoc on your finances.