Payment by credit card is considered the best way of paying the high amount bills. This is because it is secure and the amount is not being deducted from the account balance and cash reserve remains intact. Also, paying credit bills on time builds the CIBIL score. Which in-turn makes it easy for the user to avail a loan. But then why credit cards are bad?
The benefits told are only one side of the picture. The other side is in sheer contrast to it. The credit cards come with certain limitations that cannot be overlooked. If you want to develop a true opinion about the credit cards then you must consider the following negative aspects of using a credit card:
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Reasons Why Credit Cards Are Bad
Let's throw some light on the reasons pertaining to answer the question why credit cards are bad afterall?
You Turn Out to Be A Spendthrift
For credit card payments your account is not being debited. It is the third party that is paying on your behalf. It works as a temptation that makes you spend more. As you don’t have to make immediate payments you spend beyond your means. You do not resist yourself from buying a thing which you wouldn’t have purchased if the payment has to be made by cash or from your account.
Habits Die Hard
Once you start using the credit cards, you get addicted to it. Since there is no restriction on the card payment you enjoy the lavish lifestyle it offers you. You get use to make credit payments and incorporate the bad habit of credit purchases.
High Interest Rate
If the amount is paid within the credit period well and good. If not, then be ready to pay the lofty interest amount. Once the credit period of 49-51 days gets over the bank charges heavy interest ranging from 36% p.a. – 40% p.a. This mounts up your liability and reduces your self-esteem.
Terms do not remain the same forever
The bank continuously revises the credit card policies. If you took the credit card at the interest rate of 2% per month, there is no assurance that you will be paying interest at the same rates a year later.
Apart from interest on the late payment, you have to pay other charges that include the joining fee, annual fees, cash advance fees, overage fees etc. While you might believe that you don’t have to pay any charges on purchases made by credit card. But this is not true. The company charges high fees for late payment of credit card bills.
A Trap For More Debt
In order to increase their credit score and avail a loan people spend through credit cards. But it is just a trap to increase the debt. If the user defaults in paying the credit bills on time then this will hamper his Credit report. Thus, making it more difficult for the user to get a loan. Moreover, it will increase the burden of debt on the user.
Makes You Slave
You tend to believe that the credit limit is your money. This is the blunder mistake that most of the card user make. The real fact is that you owe this money to someone. And all your financial planning has to be done taking this debt into consideration. A part of your income will be occupied towards the settlement of debt, making your financial plans rigid.
Destabilizes Your Financial Integrity
Since you can pay any amount, anywhere and anytime you don’t have control on the expenses that can be ignored. It’s easy to swipe the card and pay the bill but when you exceed the credit limit… the card is rejected by the vendor. This in itself is a matter of humiliation. Also when you are unable to pay the credit bill on time the card lender keeps on poking you.
The credit card issuing companies provide several benefits and grant privileges on the card usage to allure the customers to believe why credit cards are good but are not transparent about why credit cards are bad. So to make a fair opinion about credit cards the customer must know bad things about credit cards.