There are times when using a credit card makes a lot of sense. For example, some people do this as a means of collecting points that can later be redeemed for travel rewards.
Conversely, there are times when saying “no” to a credit card would be in your best interest. For some individuals, this just isn’t a good idea. Period.
Here are five times when it makes sense to say no to a credit card, thus opting for another payment method.
1. You are on a tight budget. This doesn’t mean that you can’t use a credit card and stick to your budget. However, it can be a challenge to do so. The last thing you want is to find yourself stuck with a big balance when you aren’t expecting it.
2. You already have a credit card. Why apply for another credit card when you already have one? Unless there is a really good reason for doing so, such as a current credit card attached to an extremely high interest rate, it’s best to avoid this practice.
3. Interest is expensive. You don’t have to worry about this if you plan on paying off your credit card in full at the end of every cycle. But while this may be in your intention, things don’t always work out this way.
4. It can damage your credit score. If you miss a credit card payment, it can harm your credit score. If you max out your credit card, thus lowering your available credit, the same holds true.
Your credit score should be important to you. Don’t let the use of a credit card harm it.
5. Financing your purchases can promote higher spending. With cash, you only have so much to go around. With a credit card, it’s easier to stretch your budget today and live with the consequences tomorrow.
It’s 2016 and there are millions of people relying on credit cards as their primary method of payment. As common as this may be, it doesn’t mean you have to follow suit.
Can you think of any other reasons to say not to a credit card?