- Posted by admin
- On December 13, 2019
- 0 Comments
With all the benefits that come along with using credit cards, there are some drawbacks that may dissuade you
from using them.
Credit cards extend your purchasing power by giving you a credit limit. This limit gives you the illusion that you
have more money than you really do because you can spend money you do not yet have, and may not get.
This illusion is what gets many people into unmanageable credit card debt and the danger here is the interest and
not being able to make payments that will reduce the balance.
Your Future Income is reduced
Your income in the future is reduced each time you use a credit card–or any other form of debt–because you’re
borrowing money that you don't have. A portion of your future income has to go toward repaying your credit card
balance if you want to protect your credit.
The more debt you are in, the harder it becomes to pay off, or even pay down your debt. Continuously using your
card while making minimum payments increases your debt and decreases your future income.
Credit Card Interest, Fees, and Identity
Depending on your credit card rate and how you use it, credit cards can cost you hundreds of dollars over the
course of a year. Understanding how compounding interest works and knowing your billing period can help you
coordinate payments, and avoid fees or increasing balances.
You'll be charged fees for making a late payment. Fees add up quickly, and they are added to your balance. This
means your fees are then charged interest as well.
Debt and Life Affects
You create more debt each time you use your credit card. You can keep the debt from growing by paying off your
balance each month but if you only make minimum payments and keep making purchases, your debt will quickly
Low credit scores reduce your ability to use credit in circumstances when you need it the most. It also
demonstrates to businesses and employers that you are may not be financially responsible.