Why you should not Make Big Purchases using your Credit Card

There are many reasons why you should not make big purchases on your credit card. In today’s world and uncertain economy, minimizing credit card debt is important. When you make big purchases on your credit card, you put yourself at risk of hurting your credit score, incurring staggering interest, adding debt, and increase the feeling of not getting ahead etc.

Credit score

Your credit score should be a major deterrent when making a purchase. Most people do not realize maxing out your credit card is still bad even if you pay it off. It is better to stay within a range of 30 – 33 percent of your credit limit. When you splurge, make sure you have a debit card, or have multiple credit cards if you are disciplined.

Incurring staggering interest

Incurring interest rates can hurt especially if you are prepared for unexpected expenses. You never know when an emergency will happen or how frequently it will happen. Incurring interest rates should not be the reason behind late payments. When you make a purchase, make sure you have the funds to pay off the balance within the same billing cycle. Credit cards protect against mishaps on the merchant’s end; i.e. If you are charged double for a purchase, it will count against your credit, but if you use your debit card, then you lose out on cash until the bank resolves it.

Adding debt

When you use credit cards to make purchases, you are adding to your debt. When you live in an unstable economy you want to reduce your debt as much as possible. In today’s world, you never know when poverty is about strike. Adding debt can easily double with high interest rates on a credit card. If you are not a disciplined shopper, you should not have high interest credit cards, or multiple credit cards.

Not getting ahead

If you are making the minimum payment on your credit card, then you will not get ahead because of interest rates. When you have a credit card, you should make sure you have a detailed plan for paying it off. There are strategies such as letting your account go into collections if the limit on the credit card is relatively low; i.e. if you have a $5,000 credit card balance, you might be able to pay it off with your tax refund.

There are many reasons you should not make big purchases using your credit card. If you are not comfortable with a large balance, then you should not apply for a credit card with a high credit limit. You can seek professional help with things that get out of hand. Good luck!