When you need money in a hurry, credit cards seem like a good choice. Being able to quickly and easily get the money you need can solve a lot of your immediate problems. However, this form of credit really only creates bigger issues in the future. If you’re considering using credit cards to ease your money problems, here’s why you should think again.
Rates are very high
When you make purchases on a credit card, even if you keep up with minimum monthly payments, you primarily end up just paying off the interest. This keeps you in a never-ending cycle of debt because you’re so busy paying off the last loan that you can’t ever clear it. For this reason alone credit cards are a bad idea, but there are other reasons why you shouldn’t take on credit card debt.
It takes a wrecking ball to your credit history
Unpaid credit card debt, even if you’re making repayments on it, doesn’t look good on your financial record. Not a big problem for some, but you’d be surprised how many different businesses will look at your credit rating when deciding whether to accept you as a customer. Insurance providers, mortgage lenders, and even some employers may check your credit rating to see how trustworthy you are. Even worse, this means it’ll be even more expensive to apply for further credit cards. This means you’ll find it gets more and more expensive to borrow as you get deeper and deeper into debt. It’s better just to steer clear.
Credit cards are misused frequently
There’s nothing wrong with using a credit card for what it’s really intended for. An occasional purchase that can be easily paid off in a short period of time; that’s a reasonable and responsible way to use a credit card. In fact, generating a credit history is actually good for your credit rating, as long as it shows you’re able to manage debt effectively. However, using credit cards to clear large debts without realistically being able to pay back the loan is a really bad idea. Borrowing with credit cards is a short-term fix for a long-term problem, and there are much better solutions available.