Should you accept credit cards gladly? Those who can use credit cards smartly, the answer is most likely ‘yes’. But what about those people who are not good at managing finances? Should they use credit cards?
Although credit cards offer lots of benefits and rewards, but there are a few kinds of people who should avoid them by all means to save their financial health. But, who are these people? Find out from this article.
People who should run away from credit cards
Credit cards should be a big ‘no’ for the following kinds of people.
- Those who can’t pay bills on time: Have you met someone who can’t pay phone bill on time? This person can easily get away by paying a late fee or reconnection charge. But the same person has to face serious consequence for not paying credit card bills on time. His credit score will be damaged. On top of that, he has to pay late fees, penalty and high interest rates.
- Those who don’t read fine print: Anyone can use credit cards. One doesn’t have to be a scholar to use a credit card. Unfortunately, several card holders don’t know how interest rates are applied and the ways to avoid fraudulent charges. Just as people shouldn’t plan to offer a homemade meal to guests without knowing how to cook, people shouldn’t accept credit cards without being aware of the fundamental laws.
- Those who are reward fanatics: Some people make useless credit card purchases just to get rewards. They spend more to earn extra reward points subconsciously or unconsciously. They don’t realize that rewards are almost nothing in comparison to the interest if they fail to pay outstanding balance every month.
- Those who are struggling students: There is a reason why CARD Act of 2009 made it hard for college students to qualify for credit cards. Students live under a tight budget. A few dine outs, books and parties can fetch a huge credit card bill for students.
Damaged credit will make it tough to qualify for a home loan or an auto loan. At that point, the defaulter would think why he did accept credit cards.
Contrary to the popular opinion, I feel students should focus on savings and living with cash instead of using credit cards. They will get lot of time to build credit history.
Credit cards are a good option for consumers who can make full payments every month. Reward credit cards are tough to qualify. So, people with bad credit can try for simple credit cards they can afford every month.