As you age, you will know the importance of having a good credit history. It will go a long way if you keep a remarkable track record, especially if you plan to take a huge loan in the future. It will ultimately affect your credit score, or the rate of the likelihood that you will repay your debt.
It is not uneasy to hurt your grade, even with the simple credit card can impact your score. However, have you ever wondered if you really need the plastic? Chances are, you now have one. Here are some signs you need to look out for to know if you need to stop buying through credit:
You Can’t Pay Your Monthly Dues
One of the most telling signs that you should ditch your card is when you keep missing your payments.
No matter the reason, emergency or not, paying late or not paying at all means you are going to be slapped with a penalty. This isn’t the same as the interest, but is added to it.
It is not a joke to be given a fine, which is why this is an indication that you’re not really ready for one. Needless to say, you need to be diligent and organized when it comes to your finances, especially if you have multiple credit cards.
Paying the Minimum Every Month
Have you ever received your statement and see that you have a ballooning balance? If you have only been paying the minimum, then that’s the reason that happened.
Ideally, you should be able to pay the entire credit every month, leaving no balance at all, so that it won’t incur interest.
It cannot be stressed enough that being hit with a penalty is crucial because before you know it, the amounts have added up.
Plus, paying only the minimum is indicative of how you are spending more than what you can afford.
It might mean that your income is just enough for your necessities because you wouldn’t have to leave out balances if you have sufficient money to pay for it.
Unknown Interest Rate
Getting a credit card is relatively easy, but using plastic is a big responsibility. Sometimes, we just apply for one because we have a big purchase that we can’t buy in cash, but that doesn’t necessarily mean we understand the interest rate that comes with it. Some of us don’t even care about how much we need to pay extra.
For those who are aware, a small charge may not seem much but if you add it up with a balance over time, you’ll surely feel it.
Swimming Deep in Debts
You don’t want another burden, for sure. If you already have left and right debts, like student or auto loan and mortgage, adding a credit card is not the way to go.
As overwhelming as it already seems for you, it could further sink you. If you have been stressing over these pile of problems for quite some time, then that’s the most obvious signal that you shouldn’t use a credit card.