When should I not use a credit card?
Credit card companies offer users the benefit of making purchases while paying for them later. However, while the offers made by credit card companies might sound very appealing, you must be aware that credit cards have their stated benefits only when used with great care and sensibility. Indiscriminate spending beyond one’s means is a sure no as are delayed or defaulted payments.
There are some situations when investment advisors strongly advise against the use of credit cards. Here are a few reasons why they do so.
If you are struggling to meet your monthly expenses, do not use your credit card just because your cash position is low or it was difficult to make ends meet at the end of a month. Spending what you do not have will only run you into deeper debt, not to mention the interest that would have to be paid.
If you know that you cannot pay the credit card balance in full or you are only able to make the minimum required monthly payments, it may not be a wise idea to use your credit card. When you do this, the amount payable month on month may increase exponentially, not to mention the interest that will be levied on an ever increasing amount every month.
When you limit yourself to using a debit card, you cannot spend money that you do not already have. This would be a far safer option for those who tend to be indiscriminate in their credit card spends.
Some card companies offer you meagre credit limits and the fees levied for spending beyond your credit limit can be steep, often being more than what you purchased. Also if you keep spending beyond your credit limit, your overall credit rating might drop, which in turn will negatively impact your credit standing when you seek some other kind of loan or financial assistance. When used responsibly, there are benefits to using credit cards, but before you do that, if you lack the discipline in managing your spends and paying on time, it would be wiser to avoid using credit cards.