Credit cards are one of the best financial tools you can have, but they can also be dangerous and leave you with a lot of debt. If you are thinking of getting a credit card, you should know both the benefits and the downsides. This will help you use your credit card wisely and avoid getting into debt. Here is some advice on what a credit card can’t do for you.
It Can’t Make You Richer
Although a credit card will improve your cash flow and financial independence, it won’t make you richer. Many people who go into debt with a credit card do so because they think of their credit line as their own money. In reality, that credit line is simply the amount you can borrow from your card issuer. Instead of getting richer, you go into debt every time you spend money with your card. The only way to avoid this debt is to make sure you can pay back the spending.
It Can’t Stop Your Debt Problems
Many people reach for a credit card because they think it will solve their current debt problems. If you are spending more than you are taking in, using a credit card is not a good idea. Credit cards are an expensive form of borrowing, and charging a card will only delay your problems and push you further into debt. If you are having trouble with your debt, you should see a debt counsellor who can help you get the best handle on your problems.
You Can’t Save Money With Them
Although credit cards are a great relief and can help you make purchases that are beyond your immediate means, credit cards usually don’t save you money. For example, if you buy something on credit during a sale and only pay it off over time, the interest payments are usually more expensive than the savings you made when you bought the item. Credit cards usually cost more money than they save. Plus, the interest and fees you have to pay outweigh the benefits you usually get with credit cards.
So Why Should You Get A Credit Card?
Credit cards can lead to debt and be dangerous, but if you’re sensible and know the risks, they can be of great benefit. Credit cards are much safer than cash or checks and allow you to shop on the internet where you can really save money. It’s also much more convenient to have a card with you than to carry around large amounts of money, especially if you’re travelling abroad.
Plus, you can use a credit card to buy things you can afford, just not all at once. While it makes more sense to save up for expensive things, that’s not always possible, and with a credit card, you have more leeway when it comes to spending money. If you can try to pay off the balance in full each month, you can get the most out of your credit card and avoid the things credit cards can’t help you with.