Five reasons why you should not use credit cards

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Credit cards get you what you want right away regardless of whether you have the cash to pay for it or not. the basic principle on which credit cards work is ‘spend now and pay later’. Though there are many advantages of credit card such as discounts, cash backs, movie vouchers, reward points, interest-free period, etc.

It even helps to build good credit history but if the credit card is used recklessly, it ruins your credit history and score. Today’s generation likes to spend first and save later. The basic idea behind credit cards was to take care of our finances in case of financial emergency. But nowadays people own two to three credit cards and spend thrice as much as their salary. Given below are five reasons to say No to credit cards-

It becomes difficult to teach self-control when using credit cards. We tend to have an impulsive attitude towards buying which can impact our monthly household budget.

It is important to have a budget in place. This is because it helps to keep spending under control. While budgeting, you plan your expenses and write down your all income and expenditure. Once you figure out your important expenses such as rent, utility bills, school fees, etc., the remaining balance will let you know about how much you can spend.

Using credit cards recklessly leads to a debt trap. These cards come with hidden charges and high-interest rates. This pushes people into debt which becomes difficult for them to get out. It is advisable to read the fine print when applying for the credit card. You will get to know about the interest rates and penalties charged by your banks.

If you do not pay your credit card bills, it will start impacting your credit score. If you apply for a home loan, car loan or any other loan, banks will assume that you can default your payments in the future. They will reject your loan applications.

Do not use your credit card like your debit card. The moment you withdraw cash from the ATM, interest rate kicks in. It might prove to be an expensive affair.  Therefore, try to limit your spendings through credit card. Keep them handy in times of a financial emergency or some unbridled expenses. Make sure to pay your outstanding amount in full every month. Delaying your credit card dues payment attract high-interest rates.

SOURCE: TIMES NOW