Four Reasons to Avoid Using Credit Cards
American credit card owners have an average credit card debt of $15,799.00. This is a staggering statistic. Financial experts are advising that people should either limit credit card spending or cut it out altogether. Here are four reasons why financial experts are concerned with credit card spending, and why you should be, too!
Overspending can cause serious financial problems. Studies have found that spending behavior has been known to be affected by using credit cards. Swiping plastic, apparently, doesn’t register to people as spending money. It doesn’t feel like you’re losing anything. Having only cash, they say, makes people spend less.
2. High Interest Rates
Interest rates can easily make credit card debt spiral out of control. At rates from 13-23%, it can be difficult to get ahead on payments. You have to pay more than the minimum to pay it off and that is only if you stop using it for purchases.
3. Relaxed Credit Limits
Credit limits are somewhat of a misnomer. It’s not always an actual limit. Credit card companies will often let you spend over the limit, and then they’ll charge you for it. If you use case or a debit card, there is a firm limit. You aren’t allowed to spend what you don’t have.
4. In debt – You lose
The credit card industry makes millions in profit every year. They’re paying for all of your stuff and still becoming rich. This obviously isn’t good for you. Many people are drawn to them because of rewards. When the balance is paid off every month, some credit card owners have reportedly earned about $500.00 a year depending on how much they use the card. Others have scored airfare or other prizes. This isn’t the norm. The majority of credit card owners are paying way more in fees and interest than they are getting out. If credit card companies paid people to use their cards, there wouldn’t be any profit in it.
With these four reasons, it’s easy to see why financial advisors are leery of credit cards. It’s possible that people can spend them responsibly, but it’s not happening for the majority of Americans. The personal question Americans should ask themselves before getting a credit card is: Is the benefit of having funds available now worth the price I’ll pay in the future?