Which Is Not A Positive Reason For Using A Credit Card To Finance Purchases?
Do any of these reasons make using a credit card to finance your purchases sound like a good idea?
Ever wonder how convenient the process of just swiping a card is to buy things. Credit card and much people loves as they believe it is the second number of life line more facilities on your computer. But the question remains: is this convenience always best? And it sometimes leads to unforeseen trouble. Now, we shall take a deeper insight into the reasons of a credit card not being the best way forward to fund your purchases.
Why Credit Cards are so Tempting
So my first credit card- I know, I remember. The excitement of spending money you dun have cash in hand to purchase was such a thrilling adventure. It was like I had a magic card that unlocked doors to shop infinitely. However, convertible can fast develop into a trap for itself. Easy To Spend More With Credit Cards Echoing in the back of my mind is “I can pay it off later… I have a little time.”
I know many of us including me are practicing this habit. You purchase that new gadget, extravagant dinner, or fresh threads all with credit. The problem? It can lead to debt. Because its easy to go over what you pay for around the state. But then the bill comes due and the hangover sets in.
You could end up feeling overwhelmed and saying, “What the hell was I thinking?”
Credit Cards and Spontaneous Purchases
Credit card usage causes people to overindulge in impulse buying. Let This be a Scene: You are going to Store for getting 1 item, and come out with shopping bag Full of things which you never thought off buying.
I know I experienced it when I was at the mall recently. Which I thought were a pair of shoes But, I left with clothes, accessories and a new phone case instead. The worst part? I was trying so hard that I had to not need those two items.
Initially, impulse buying with a credit card seems harmless. But it adds up quickly. However, before I knew it, my credit card bill this time was through the roof!
How Savings Can Become Debt Thanks to Interest Rates
Credit cards often have sky-high APRs – higher than you think. Knowing this, I started to reconsider some of my spending habits. When you receive your bill and realize how much interest has been added to it, the thrill of new purchases can wear off in no time.
For example, if you put a $1,000 laptop on a credit card at 20% interest … When you only pay the monthly equivalent of one minimum requirement, this increases to almost double that amount over time. I was surprised when I calculated this. Reasoning then that I was the one getting a bargain, when in fact, I was further inside the financial hole.
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Credit Cards Can Hurt Your Already Bad Credit Score
Paying with a credit card may sound innocent, but it can easily turn to the dark side if abused. You see, when I initially got my credit card, I was under the impression that it would be okay if I skipped a payment or two. It seemed like a small issue. Both those missed payments began to be a heavy anchor on my score.
It may have an impact on many things in your life from taking out a loan to applying for some rental properties. Potential lenders will deny your application or offer you high-interest rates if they see a low score I experienced this when I applied for an auto loan.
Thus, consider this: Is the seductive feeling of purchasing something now worth a possible negative impact on future ability to obtain credit lines?
The Hidden Costs of Credit Card Fees
There are a lot of hidden fees to credit cards that can really catch you off-guard. I learned this the hard way. At the time, I was under the impression that I was clever for billing everything to my card. However, over time I realized my balance was increasing from being charged late, annual and foreign transaction fees.
You know how those fees just come out of left field. It’s frustrating. Let me be honest, the novelty of using my card eventually wore off when I realized what I was actually spending on fees.
Stop these hidden fees from slipping by A lot value turbo, they will certainly transform into expenditure actually swiftly.
The Illusion of Free Money
The biggest problem with credit cards is that they allow a feeling of ‘free money. When you use that card, it can feel like someone else’s money you’re spending. I always believed, “Oh, I’ve realized it now but nevermind I can repay it in a later part.”
Yet that attitude could be dangerous. Credit card is not money for free, They require a duty to them. Most of the time, you will have to pay them back with interest.
It took me a couple of errors (some self-inflicted) to truly realize this. I bought a new video game system on credit once. I thought it was a steal until I calculated the interest. This was a lesson which I learned the hard way.
Relying Too Heavily on Credit May Hurt Your Financial Independence
Using credit cards too much will affect your financial independence. Silly me, all that time I thought I depended on my credit card. So on one side it has me feeling secure the other it turned to a dependency.
This problem came about when I attempted to survive a month without my credit card. I soon noticed I was growing way too dependent. I was forced to adapt my shopping list so I could budget properly. While it was tough, I learned life skills like being financially accountable.
It is okay to have a credit card, it just should not be what you rely on financially. Adding more and spending money that you do not even have can very easily spiral out of control.
Fraud and Identity theft syndromes
While the convenience of owning credit cards is known to all, they do present some risks. Yes, it is understandable: fraud and identity theft have populated the minds of individuals. I once got my card info stolen shopping online. It was a nightmare.
I had to cancel charges and be on the phone for 30 minutes. It made me realize just how exposed to fraud credit card users could be.
Credit card almost always comes with fraud protection, however the follow up is a pain all the way. It is important to know of what you are getting yourself into.
Peer Pressure to Live Upto Others
Do you ever feel pressured to keep up with your friends or co-workers? Credit cards take this feeling up a notch. It can be difficult to remain disciplined when it seems like everyone else is buying new stuff.
This is how I began feeling — I supported this being surrounded by my peers who owned the latest gadgets; I wished to be in because of them. Ultimately, I wound up tapping my credit card for unnecessary purchases.
This habit can lead to financial pressure. More often than not, trying to keep up with someone else will leave you feeling full of remorse and regret later. Always prioritise your financial health over impressing others.
The False Sense of Security
The flip side of credit cards safety net My credit card made me feel invincible. It was my safety blanket. But that feeling is a slippery slope for impulse buying.
I hadn’t even considered spending my money on Porridge for breakfast. Which, of course, brought about a mountain of debt.
A credit card is not a cushion to fall back on. We all need an emergency fund and a budget. This way, you steer clear of that perception and relying point credit cards offer.
Non-Credit Payment Solutions
By eliminating the transaction fee, you reduce the incentive to use a credit card. However, I have realized that spending within your means can be achieved by using cash or debit cards. Doing this when I pay with cash allows me to know exactly what I am spending. This visibility allows me to make the best decisions.
I have found budgeting apps to be helpful. I am able to keep all my expenses on track and within budget. A must have choice to make so as not to lend up in an emergency situation with the credit card.
How I became financially literate and aware
In retrospect, credit cards have put me on quite the journey. What I did realize on the other hand is that if you have a piece of plastic that can make you spend more money than you have, very far away from cash in hand and reserve bank balances, it might make life difficult. This is coz of my own experiences that trained me to understand how important financial awareness can be.
And now I try to save responsibly. I still have a credit card from halifax which I occasionally use, but not to the extent of buying herself dresses on Bicester Village luxury brand outlets any more. I have learnt a lot from my mistakes.
Conclusion
Final thoughts — credit cards are sexy. The services are made for convenience and ease of use. However, it is important to understand that they can also put you at risk of falling into financial potholes. Here are a few factors that make the illusion of free money, impulse buying responses and hidden fees to be had.
Sparing you the details of my anecdotes, a lesson I also learned then was to always watch your spending. Explore the other options and take a wise decision. It can help you stay on top of your money and prevent the pitfalls of credit cards.
Like I said earlier, financial health always comes first! Stay informed, budget smartly and try to make decisions that are in line without your long-term goals.