It is undeniable that credit cards provide flexibility in transactions. Without having to carry cash, just swipe your payment machine to get the goods or services needed. Credit cards provide practicality when in an emergency situation where we do not have funds, we can previously borrow funds to the bank (credit) which will later be paid by the borrower.
Furthermore, credit cards offer attractive promos or deals so that cardholders shop using it.
Behind the advantages of credit card ownership, there are a number of losses that you must know. Credit card ownership should think that by using a credit card you will owe, this means you must also be able to pay.
But the reality is that a lot of credit card users forget to pay their debts on time, causing various losses. Here are the types of losses caused by using credit cards:
Disadvantages of using a credit card
Debts are increasingly piling up if shopping is not restricted
Using a credit card is indeed practical because you only have to swipe away when you have completed the payment. The availability of credit card payment methods that are found by many card users sends encouragement to shop. Shopping with a credit card is not using the funds in a savings account, but debt to the bank.
Easily shop with a credit card without restrictions, of course, make the debt more piling up and if late paying, the debt will continue to mount.
Excessive consumptive behavior
Credit cards offer attractive promos or deals that encourage people to shop. It is true that credit cards offer prices that are relatively cheaper compared to other payment methods. But you know, this spoils excessive shopping behavior. If you fall asleep with unnecessary promos or deals, your debts will also accumulate.
Credit cards give the illusion that cardholders can buy many things that cost more than their income. In this case, cardholders must be wise in using credit cards according to their needs and ability to pay.
Payment of interest and other expensive fees
The average credit card program eliminates the first annual fee but starts to be billed in subsequent years. Banks charge interest for each debt so that if calculated, paying the debt is more expensive than the initial expenditure. Even worse if you forget to pay debts on time, then you will be charged a penalty fee so that the debt you have to pay is getting more expensive.
Expensive cash withdrawal fees
Credit cards are really useful when traveling abroad. You can withdraw cash at the local ATM. However, you have to know how much it costs to withdraw one cash. According to the Nest, withdrawing cash with a credit card is more expensive than using a credit card because credit cards charge fees and interest for cardholders.
As for one thing that you should know about credit scores (credit rating) that is an appraisal system whether or not you get a loan and be taken into consideration by the Bank. You can get a bigger limit or are allowed to borrow if you continue to improve good credit scores.
Use a credit card carefully and effectively
Not all credit card usage carries losses. If you use it responsibly – pay on time and do not exceed the limits given, of course, provide convenience benefits in transactions of daily needs. Previously Sepulsa has shared stories about using the correct credit card. This time we added two ways to prevent losses from using a credit card!
Remember, transacting with a credit card is to increase the debt
As mentioned before, using a credit card is indebted. If you are ready to use a credit card you must also be prepared to pay. In the midst of lots of lucrative discounts and promos, you also have to hold control of your instincts for shopping.
Make sure you can prevent your debt from mounting by paying your bills on time and in full. If you forget to pay on time, you must be prepared to pay late fees with interest determined by the bank.
Adjust the limit with income
If you are a credit card holder it is better to limit credit limits according to income. This prevents you from being able to borrow beyond your ability to pay. If every month you earn USD. 8 million you would be better off asking for a bank limit of 3 million. Because you can manage expenses so that your financial condition is healthy.