Should you use credit cards? Or avoid them like the plague?
Every young family must face this dilemma at some point in their lives. Some people may be tempted to spend more than they have with a credit card, while others may not be able to see a way to live without them. It’s how they pay for everything. I am one of these people. While using a credit card may come down to a personal preference and ability to handle debt, it may be costing many of you thousands and thousands of dollars.
Reasons to Avoid Credit Cards – Are they Legitimate?
I’ve heard many reasons why people avoid using credit cards. Whether it is a way to keep their spending in line or just don’t like the feel of them, there are a variety of reasons not to use them. Have you heard of any of these? Maybe some of these are the ones you give:
- Using cash makes me think about how much I am spending
- I don’t want to remember to pay my bill each month, I would rather have it deducted from my savings.
- I applied for a credit card once and got denied, so I figured it wasn’t worth the hassle of applying again.
- I don’t understand the difference between a credit card and debit card. Both say, “visa” on them. Aren’t they the same?
- Not all places take credit, but all places take cash.
While a couple of these reasons may seems silly to you, there are plenty more reasons why people don’t use credit cards. Yet, despite all my good intentions to try and understand people’s finances that are different from mine, this isn’t the best decision. Refusing to use credit cards to control your spending is a bit extreme. The credit card isn’t the problem – it’s you. You’re the one who keeps a wish list. You’re the one who goes to buy something you can’t afford. If you truly understand what is a necessary expense and what is not, you wouldn’t need to do this dance.
Why You SHOULD Use Credit Cards
I recently discovered that both your credit score and credit history matter when it comes to big lifetime decisions. If you ever want to get approved for a loan or financing of any sort, you need credit history. Without it, your credit score and reputation as a person to loan money to will suffer. Not only does this determine whether or not you will be approved, but at what rate. Higher credit scores get lower interest rates. This means it will save you money on your first home purchase. But that’s not all.
Credit cards not only give you a credit history and help your credit score, but they also give you the option of earning money for everyday expenses. My wife and I use our credit cards regularly and we get approximately $400-500 each year in cash back bonuses. This is money that we wouldn’t have if we paid with cash.
By changing this one way of buying things, you can save more money AND set your family up for financial success. Don’t wait any longer to start using and paying off your credit cards. It could be the best decision you’ve made in a long time.