When used wisely credit cards are a valuable financial planning tool and can help with the budgeting process. Licensed money lender in Singapore help to create a credit rating so what then are the reasons to not get a credit card among others? While credit cards are the most common form of credit today, they are unfortunately the most common way of getting into debt. Many feel more comfortable handling a card than handling cash which leads to overspending. It makes you feel as though you have cash when in fact spending on credit card is a loan. If you are not careful, this debt can be all consuming and seem impossible to surmount here are 7 Major Reasons Not to Get a Credit Card.
You might end up in more debt than before
Because you are fooled by the thought of using a card that gains no interest, you may tend to overuse it. It would be good if you can pay-off your debt completely during the zero interest period, but if you could not, you would end up having more debt than before. Some people use zero interest cards to transfer their balance from their other cards so that they would be able to pay the principal of the debt and not the.Credit card debt results in the accrual of high-interest rates which tend to be higher than normal loans. The interest charges mean that you pay far more than you originally spent.As easily as creating a credit score, this can be undone by missing payments and not make minimum payments. All will add to a negative credit rating. Late payments incur fees which only add to your debt.
Credit card payments are more than the minimum payment
Another thing to keep in mind is to pay more than just the minimum payment amount. Otherwise, you’ll only be paying on the interest, and that can make paying off your debt take forever! If you should find that you are way behind in your payments, and the interest rate is high, try to contact your credit card company and negotiate a new rate. When paying your monthly bill, try paying more than the minimum amount, and you’ll see the balance on your statement dropping at a dramatic rate before your very eyes. If your credit card is primarily used for emergency situations, remember to try and pay the balance in full. By paying the balance in full, you will stop interest from accumulating, and stay one step ahead of debt.
Card fraud is very common which causes a lot of hassle and is very stressful. Often an email arrives that appears to be from your bank or card provider. Replying to the email can be dangerous as you are likely to be providing information to a fraudster or someone who is stealing your identity. Exercise caution especially if you are asked for details the bank should already have, however, the debt that many incur with their cards that make it a hazard for many. A debit card is a good alternative as you can use the card in the same way but you are spending your own money in the bank.
Interest-free limited period
Just because they say that the card is zero interest doesn’t mean it would remain that way forever and you can just put-off paying for your debts on this card because it does not gain interest. This is very wrong. Interest-free credit cards have a limited-time offer, which means your loans and purchases using the card would only be zero interest for that length of time, which is usually three to six months starting from the day you first get the card. After this period, your debts shall incur interest, depending on what is specified in the credit plan. If you have a huge debt that you have not paid-off during the interest-free time, you are up for a big surprise once you receive your bill.
Credit score reduction
As we all know, a person’s credit score will either increase or decrease, depending on how he manages his finances. Credit bureaus regularly check your financial information. If they have seen that you have gotten zero interest cards and are using them without thinking of your other debts, they may deem you unable to manage your finances well, hence reducing your credit rating.
A credit card can lead to multiple entries
Purchasing online can lead to multiple entries being made over a period of months. Entries to your account that appeared genuine at the beginning turn out to be a scam. This could be sending a free CD and paying postage, only to find a few months down the track you are still paying, and the amount has increased.Some think that air points and other rewards points make it worthwhile having a credit card. Unfortunately, you need to spend a lot to get those points. By all means, accept the points but don’t go and buy for the reason of gaining points. This once again leads to overspending and into debt.
It will affect your lifestyle
Having credit-card debt can affect your lifestyle, drain your bank account, and constantly weigh on your mind. Most credit card interest rates can accumulate at such a rapid rate, and before you realize it, you end up owing a lot more than what you originally borrowed. The hassle of getting caught up in credit card debt is a lot like the old movies, where someone borrows from a loan shark and then gets in over their head – unable to pay the money back. Sure, the credit-card company is going to send someone out to rough you up, but they can sure mess up your mood.
If you just recently enrolled in a credit card company, make sure that you don’t start slacking at some point, but stay on the ball. Remember, credit-card companies are in it to make money, and they will do everything in their power to see that they do. They will be on top of catching late payments, slapping you with a late fee and in most cases, they will also hike up your interest rate – this makes it tough because those fines.