Although credit cards may seem like a necessity to many, they actually aren’t! If you’re someone who just can’t do without them, here are the probable lies you may be telling yourself for piling up credit card debt over a period of time:
It’s a great deal!
Bargains are excellent, but you must never use them as an excuse for incurring credit card debt. There’s no point buying more than what you actually need, even if it comes at a discount. If you look back at the end of the year, great deals and bargains come and go pretty regularly. But, getting taken in by them may leave you under a huge pile of credit card debt, with major sums paid as credit card interest over months and perhaps even years!
After all, it’s an emergency!
Quite often we use our credit cards in situations that we perceive as emergent in nature. Nothing denying the fact that true emergencies do arise from time to time, for instance the medical ones that you can’t neglect at all, but many times the situations we consider an emergency aren’t actually that.
Doesn’t matter if your smart phone has been giving you a hard time or the second car requires repairs, you can easily carry on without using your credit cards on things that may initially seem like an emergency expense. You can’t call a situation an emergency unless it puts your liberty or life at stake.
The rewards are too good!
We easily get attracted to all kinds of cashback and travel rewards offered on credit card purchases these days. However, buying things just to bag such rewards can push you deeper and deeper into credit card debt. Rewards are excellent as long as you can manage to pay your credit card bill in full each month. But if you can’t, stay completely away from such expenses.
I’ll clear it after graduation
Perhaps the biggest credit card lie that students tell themselves is that they’ll be easily able to clear their hefty card balances post their graduation. Many studies also show that the college students’ outstanding card balances grow significantly during the later/final stages of their graduation.
One of the major reasons for it is that students often talk themselves into believing that they’ll be easily able to handle any debt after they graduate, once they get a job. So, basically they start their career already buried in credit card debt. Add to that the student loan repayments and their monthly outgo can get pretty overwhelming sometimes.
I deserve it!
This one may have bitten you quite a few times! How many times has it happened that after slogging so hard and saving money on a consistent basis, you’ve let your guard down occasionally, under the garb of some well-deserved reward?! Letting yourself loose at such times can put a huge dent into your pocket.
Doesn’t matter if you’ve had a difficult week. Using your credit card to pay for that unaffordable $ 200 fancy dinner isn’t done. It’s almost like working so hard to take one step forward, and then receding back two steps in the end.
We aren’t saying that you shouldn’t take any breaks! Breaks are fine, and in fact necessary sometimes, but what you must avoid is using your credit card for such breaks. Why not find some innovative way of rewarding yourself that doesn’t worsen your financial problems more.
The card has 0% APR!
Low interest or 0% APR credit cards can be likened to a drug dealer handing out his product at a huge discount or for free initially. The prices are hiked as soon as you get hooked to the drug!
In case of credit cards, the interest rates can spike up into the double-digit range after expiry of the introductory 0% APR time period. If at all you are keen on using a 0% APR deal, ensure that you pay off your credit card balance in full before the expiry of the offer-period.
It’s hardly anything!
It becomes so easy to use your credit card if it’s only a small amount involved! However, incurring many such small charges over a period of time can snowball into a huge mountain of credit card debt. If you’re someone who’s been working hard on his/her credit card debt, you need to completely stay away from credit card charges no matter how small they may be.
The finance charges aren’t much
Let’s be honest and answer how many times we’ve justified credit card purchases thinking that the finance charges aren’t much after all! We all think this way when we’re buying a house and need to figure out our ability of making the monthly payments.
However, things can turn ugly quite quickly with the credit cards. As majority of credit cards feature a monthly finance charge of around 2% (on the outstanding balance), the interest payments are quite small compared to the overall outstanding amount. For instance, a $ 1000 laptop may only involve around $ 20 per month in finance charges. It may seem like a pretty manageable figure initially, but once you get into the habit of using your credit card regularly, the monthly outgo on interest payments can grow substantially over a period of time. Please don’t forget, you need to payback the original borrowed amount too!
It’s for business purpose
Business credit cards, especially the ones sold to small companies can help them solve many problems. These cards can be effectively used for tracking the employees’ monthly expenses and for keeping the business expenses separate from the personal ones. However, at core, business credit cards are just like any other credit card, and have the same inherent issues as far as your vulnerabilities are concerned. When you have a business card, it’s much easier to justify an expense as a necessary one, which you could have actually done without. It’s entirely up to the business owner to decide whether an expense is really unnecessary or not. In general, it’s observed that people spend more freely with business credit cards than they do otherwise.