Credit cards are often too attractive to resist. Many of them come loaded with some good welcome gifts, some good offers, a good credit period and the promise of enabling you fulfill your dreams via credit limit. Yet, for many people, especially first timers, this euphoria vanishes before few months. The underlying reason for most of them is – “I don’t know how the money vanishes and I land up with so much of credit card bill”. In other words, they are unable to control expenses.
Credit cards can be very helpful in organizing your expenses, getting rewarded via reward points and earning interest as you defer your payments by around a month on average.
However, use of credit cards, if indiscriminate, can soon backfire.
You need to stop using credit cards if –
- You are an impulse shopper and don’t think twice before buying stuff worth thousands – with/ without any clearance sale.
- When you are unable to pay your card and paying interest on your outstanding is more of a norm than exception.
- If you tend to be swipe-happy when drunk or hungry. These are the times when one is likely too spend a lot only to regret later.
- If credit cards are the only way you could make a big ticket purchase, and you couldn’t afford it in cash
- You don’t care too much about interest free time period (not a big sum usually) or reward points (even debit cards have rewards) and find credit card a distraction.
One may argue that you may need to use credit cards in case of emergency. Fair point. In that case, probably you can keep your credit card (s) outside your wallet and not save it online, but still within your reach (e.g. locked inside an almirah). This is still the second best option – the best being being able to control your expenses and spending behavior.