Who Should Use A Credit Card And Who Should Not
Credit cards have become a controversial subject. Many enjoy the features, benefits, and rewards that these products offer while other wish they had never held one at all. The majority of American credit card users carry a balance each month, which imposes tremendous costs on their personal finances. Although some who carry a balance are able to manage their debt with 0% APR balance transfers, many others find the amount that they owe to be spiraling out of control. Before credit card holders apply for new cards, or cancel their existing ones, they should consider the types of people who should, and should not, be using these products.
Who Should Use A Credit Card
From the consumer’s standpoint, the ideal credit card user has always been one who pays his or her balances in full and on time each month. By making only those purchases that they can afford to pay in full, these types of people use their cards merely as a method of payment. As a result, they enjoy all the benefits of credit card use, including the best credit card offers with rewards.
Another time credit card use can make sense is as an emergency form of payment. Some people use cash, checks, or debit cards for most transaction, but carry a credit card for unusual situations. People get sick, cars break down, and other unexpected expenses can arise. At those times, having a line of credit may be the only way to make immediate payments that are required. Ideally, those balances can be paid in full using cash from a savings account normally used for emergencies.
Finally, credit cards can be extremely useful to travelers. Those who travel on business may wish to use a credit card to incur expenses that are reimbursed by their employer or their client. In addition, having a credit card makes it much easier to rent a car or to reserve a hotel room.
Who Should Avoid Credit Cards
Those who are unable to manage their debt should not be using a credit card. For many users, credit cards become a license to spend, which results in crippling debt. These users are unable to restrain their spending to fit within their available income, which results in runaway credit card debt. Other credit card holders are capable of keeping their debt at manageable levels, yet they are unable to make timely payments to their card issuer. In these instances, the results are similar or worse than those who cannot control their spending. These cardholders will incur late fees and penalty interest rates while finding their credit scores declining rapidly.
When used responsibly, credit cards can be valuable, secure, and convenient methods of payment. It is even possible for some account holders to use their credit cards to borrow money responsibly. At the same time, those who find themselves in a perpetual cycle of debt should seek other ways to pay for their daily expenses.