Sunday, June 16, 2013

Credit Card Vs. No Credit Card

In a world where cash seems to be disappearing some people are opting to get rid of their credit cards replacing them with cash, checks and debit cards.  Is a mountain of debt a good reason to let go of the plastic? When everything else fails then drastic measures may be necessary let's consider the pros and cons of owning/not owning a credit card (CC).

Pros of owning a credit card
1. You can build credit to buy a home, car or start a business.
2. Protection against wrong charges and help with items you want to return (insurance on purchases)
3. Some employers are looking at credit scores to see if you are good with money
4. Better credit scores mean lower interest rates on mortgages and other loans
5. Online shopping saves you money online shopping requires a CC
6. Access to money in tough situations (traveling, lost, running late)

Pros of not owning a credit card
1. You will spend less; research suggests that consumers spend more when using CC's than cash
2. Privacy,you can't be traced as easily when using cash (those really concerned will love the Bitcoin)
3. Lower-income individuals usually end up with high CC debt + high interest rates
4. Consumers are more likely to buy unhealthy food when paying with a CC
5. If you have friends with bad money habits you are likely to imitate their CC shopping patterns
6. You only spend what you earn

A credit card is a good financial companion only if you have the discipline to make payments in full and will not use it to shop until your balance becomes unmanageable.  We are visual consumers when we handle cash we take the purchase more to heart that is why keeping some cash is not a bad idea.

No comments:

Post a Comment