Many people today have no problem charging a purchase to their credit card. In fact, many consumers do not think twice using their credit card for any purchases that they did not really plan to buy. Can this kind of behavior put you in danger?
Yes, it can. You could be putting yourself at a greater risk of bad debt if you continue using your credit card on impulse. If you’re not sure whether you can afford the purchase or you can submit your payment on time, you should not be charging to your credit card at all.
Sometimes, the best thing to do is just say no to credit card debt. When should you say no to credit card debt? Consider the following points to ponder:
1. You find it hard to control personal spending.
If you’re having difficulty keeping your spending in check, it could lead to serious financial problems sooner or later. Now is the time to change that attitude and exercise more control over your spending.
2. You are exceeding your budget.
If you own a reward credit card, don’t make purchasing an excuse to earn more points. If your credit card bill is breaking your budget, then obviously it is an issue you should address right away.
3. You are paying expensive interest rates.
Do you usually find yourself paying only the minimum due to your credit card charges? If yes, then you are undoubtedly paying a considerable sum of money on interest rate charges.
Most credit cards today have high-interest rates, particularly credit cards with rewards. What you originally purchased for $50 can instantly become an $80 worth of purchase due to the APR. The bottom line is, if you’re not sure whether you can pay your balance in full on time, do not charge it to your credit card.
[GOOD READ: What You Should Do When Debt Overwhelms You ]
4. Your personal relationships are affected.
Do you find yourself in the middle of an argument with your spouse, parent or other family members because of credit card bills, debt, and other issues that involve money? If so, then you should definitely start taking action today. Don’t wait until your debt problem grows from worse to worst. The sooner you can take control of your debts, the sooner you can get yourself out of bad debt.
5. Your personal credit score suffers.
How you handle your credit card account can have a huge effect on your credit history. For instance, if you’re usually late in submitting your payments, even just for one day, your credit score can drop by as much as 35%. If you often maximize or exceed your credit limit, your final rating can be lowered by as much as 30%.
Although credit cards can be used as tools for building good credit, it will largely depend on how you manage each of your credit card accounts. Keep in mind that you do not need to carry a balance to build a high score. What’s more important is being able to submit your payments on time and keeping your charges below your allotted credit line.
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