Why Credit Cards Are Not For Everyone!

Credit cards are not bad in and of themselves. Millions of people use them responsibly every day and even pay them off each month. However, for some people having a credit card can be a bad idea.

Who shouldn’t  have a credit card

If you have a problem with impulse buying, then having a credit card may not be a good thing for you to have. Especially if you do not have the money to pay it off each month in full. Lets say that you buy a new iPad with Retina display for $500 With the average interest rate of a credit card being 14.93%, that impulse buy cost you an additional $75 over a year of making payments; And that is just for one item. Imagine what is like when you finance your entire lifestyle. You could end up paying hundreds if not thousands of dollars in interest payments on your credit cards.

The alternatives to a credit card

The Cash Envelope System – This is where you put all of your spending money each month into envelops so that you don’t overspend in categories that would normally fluctuate each month. These categories include entertainment, groceries, gas, etc.

A Debit Card – Since debit cards are becoming more prevalent these days, you can use them almost anywhere a credit card is accepted. What about renting a car or a hotel room with a debit card? Yep, you can use a debit card for these as well. They might require putting some additional money on hold, but as long as you don’t destroy the rental car of trash the hotel room, you should have nothing to worry about.

A Prepaid Debit Card – This is a card that you have to add money to as you go. You can also set up direct deposit onto your prepaid debit card if you plan on using it on a monthly basis.

Do you use a credit card and if so, do you pay it off each month?

Image Credit: Value Rent A Car