Are Credit Cards Bad News?
In the financial counseling world we coach people on a daily basis to ditch and cut up their credit cards for good. But it's not always realistic for some people to never need one again. Here's a breakdown of why credit cards can be bad or good.
- They result in debt. If may be that you want to make a large purchase and don't have the cash. Or maybe you can't afford all your living expenses with only what you earn.
- Balances keep growing &/or they take forever to pay off. You're making only the minimum payment, which is not covering all of the interest that's being tacked on each month. Or, you continue to use the card, which increases the balance.
- They're stressing you out. You worry about how you're going to make next month's credit card payment. Your card balance might continue to increase, especially if you keep using the card.
- They can help improve your credit. You make on time monthly payments and don't carry over balances. And if you don't have much of a credit history, having a different type of account helps as well.
- You need a card for work purposes. If you don't have a credit card supplied by your employer, yet you have large expenses from a trip or other purchase you can't afford yourself but you'll get reimbursed, a credit card can be really helpful to avoid breaking the bank. **Just make sure that you use the reimbursement to pay off your credit card right away and don't mistake that as income.
- You can earn rewards. Again, this is only good if you're using your cards responsibly. If you're racking up debt, but getting free things, you're really not getting a free reward.
To Sum Up
Credit cards aren't always bad if they're used appropriately. If you find that you're easily tempted by that available balance to charge items, avoid the use of credit cards unless absolutely needed. It doesn't mean you need to shut down your card. Just keep the card somewhere safe, but also somewhere that you won't be tempted to use it. If you can avoid the spending/charging temptation and use your credit cards wisely, then they're not all bad...and for some can be really helpful.
Just remember that you need a back-up plan or financial safety net in case you have a financial emergency or a reduction in income.
If not, you might find yourself being tempted to charge something on your credit card and the vicious cycle of credit card debt will begin.
Already have a credit card balance and it's taking a long time to pay it off? We can help. LSS is a nonprofit that provides tools and resources to conquer your credit cards for good. If you would like a free financial counseling session, click to GET STARTED ONLINE or call us at 888.577.2227 for a phone, Skype, or in-person session.