Credit cards can be useful tools if they are handled properly. However, if you don’t know how to use them correctly, then you can quickly get into financial trouble.
There are some reasons to stop using credit cards.
There have been studies that show many people tend to spend more when they are using credit cards than with cash. When you are paying with cash you are likely to only have a certain amount of money with so you need to pay more attention to how much you are spending. The tendency to feel like you are spending more exists, and you pay more attention to your spending when cash is used instead of handing over a credit card.
Using cash may also lessen the temptation of impulse purchases. Again, if you only have a certain amount of money to spend you will stick mainly to items that on your list.
Reduce the chance of identity theft
It is still possible to have your financial identity stolen even if you don’t use credit cards, but the chances increase with the use of credit cards. Employees at certain establishments have taken credit card numbers of customers and used them to charge purchases of their own. Using credit cards can increase the chances of identity theft by more than 50 percent than not using credit cards.
No more late fees
Besides the finance charges on credit cards if you carry a balance, you may also incur late fees if the company does not receive your payment by the due date. The finance charges can be up to $35 a month; this will slow down your repayment significantly if you regularly pay your bills late. Many people feel they are doing alright financially if they are able to make the minimum payments. In most cases, the minimum amount due will barely cover the finance charges. So if you make only the minimum payments, it will take you many years to pay off the balance and it will end up costing you many times the original price of the items you charged.
Card rewards are not as beneficial
Many people use their credit cards more thinking the reward points will make it beneficial. In recent years, companies have raised the number of points that are needed for free airline tickets and other rewards. With the increase in needed points the rewards are more out of reach. Also, if you charged amounts that you cannot pay off in full within a month or two, the finance charges deduct from the value of the rewards.
Credit cards are useful if used correctly, but there are also several reasons to consider stopping or reducing the use of credit cards.