When You Should Avoid Using a Credit Card?
Making purchases with a credit card is not always better. When you make payment to merchants using a credit card, they will have to pay a cut of the profit to your credit card issuers. Merchants only recommend credit card because they want to make shipping with them easy for you. Cash payment profits merchants more than a credit card sales. Thus, there is discount on any item purchased with cash. With cash payment,the process is more real to you that you will almost forget the protection offered by credit cards. There are other reasons why other methods of payment should be considered over a credit card. Here are some of them discussed below.
You can not pay your balance in full and on time:
If you find it difficult to pay your monthly balance, use the debit card instead of a credit card to avoid building debt with the accompany interest.
You spend more than you earn:
Debit card limits you from spending what you don’t have at present. Credit card can make you exceed your credit limit leaving you with balances to pay. This can mar your credit score if you don’t meet up with the payment.
You pay additional fee with a credit card
Some expenses you make will in cure a transaction fee if paid with credit card. Examples of them are – taxes, mortgages and student loans. With a credit card, you are paying additional 2.5% outside the original payment.
Behavioral finance component is attached to paying with a credit card
Because you are paying with a plastic, you might be tempted to spend more compared to when you pay with physical cash. You will surely have the urge to keep some cash away because they are real.
You need to be well disciplined to enjoy the convenience of a credit card.It is preferable used by those who can pay their monthly dance on time and in full.If you can handle the responsibilities that comes with credit card, it is recommended you make your purchases using a credit card.Do not use a debit card except solely for ATM access. With your credit card,you will earn rewards that will keep you at the fore front of those with other types of card.