Just about everyone has a credit card, but this doesn't mean a credit card is a good idea for everyone. A credit card can help build your credit history, and it can provide funds in an emergency. But some people get into hot water because they can't control their spending. And the truth of the matter is, some people should avoid credit cards to reduce the risk of accumulating massive debt. Are you thinking about getting a credit card? If so, here's a look at seven types of people who should avoid credit cards.
If you're a chronic spender and you can't control your shopping addiction, you need to avoid credit cards like the plague. A credit card puts everything within reach. There's instant gratification, and because you're swiping plastic, it's easy to lose track of how much you're actually spending. If you're not careful, using a credit card can result in thousands of dollars of debt and it can take years to pay off balances.
It's important to have control of our personal finances. For that matter, if you're a follower and you allow friends or relatives to influence how you spend money, you're probably better off without a credit card. A credit card makes it easy to buy things we can't afford, or things we wouldn't otherwise purchase. And if you don't have the willpower to resist temptation, you need to avoid plastic and stick with cash.
Your parents might cosign for you to get a credit card, but consider whether now's the best time. On a college campus there's temptation to go out with friends and buy things you can't afford. And if you get stuck with high balances and you can't make minimum payments, your credit score – and your parents' credit score – might suffer. A credit card is good to have in case of an emergency, but only if you have income and you know how to use the account responsibly.
Several credit cards have reward programs that let you earn miles, points or cash back for every dollar you spend. It's an excellent way to save on future merchandise. But if you're a rewards chaser, you might use credit cards just to rack up points. And unfortunately, this can trigger large debt if you don't pay off your balance in full every month.
Some people feel paying with credit is much easier than using a debit card. There might be truth to this, but if you use your credit card for everyday purchases, yet you only pay the minimum payment each month, you're potentially charging more than you're paying off. Timely payments will keep your account in good standing, but you'll also accumulate debt as you add new charges every month.
Maintaining a good credit score is all about responsible use. And unfortunately, if you're disorganized, you might forget due dates. This can result in late fees, a damaged credit score and problems with your creditors.
If you already have several credit cards with maxed out balances, you need to avoid credit cards like the plague. Before you add another account, get control of the debt you currently have. You need to make monthly payments on time and pay more than your minimum to get out of debt sooner.
Many people feel comfortable with a credit card in their wallet – just in case. But before applying, you need to consider whether now's the right time to get a new credit card. Who else should avoid credit cards?