It takes a certain amount of restraint to have a credit card and use it properly, especially when you find yourself under financial pressure or have a bad habit of overspending. Though it can be helpful in affording you a good credit score over time, a credit card has also been linked to a number of cases where individuals find themselves over indebted.
One common misconception made by consumers is that credit cards offer financial security – this line of thought is the reason why many individuals keep their credit card handy for a “rainy day” or “impromptu spending spree”, without acknowledging the implications involved in spending on a credit card without following a credit card plan or taking the time to think it through. Credit cards have very high interest rates and, when payments are missed, can lead to costly late fees, increased interest rates and a damaged credit score that can have a serious effect on your life. Credit cards often provide a false sense of security, especially when you as the consumer tend to overspend.
The general rule is simple – don’t spent money that you don’t have. In certain instances, credit cannot be avoided, however there are ways to avoid going down the wrong path and finding yourself missing payments or being overwhelmed by unexpected bills – don’t spend more than you can comfortably afford to pay back, and also make sure that you fully understand the interest rates and other terms and conditions involved before you start spending on your credit card.
Certain candidates applying for a credit card in South Africa, such as students with extensive student loans to their names, homeowners paying off property or individuals who have multiple debit orders coming off their account, are prime examples of individuals who should probably avoid credit cards altogether, or at least until they have more control over their current financial obligations. It is also not advisable that a consumer apply for a credit card to simply afford a large purchase or fun vacation – the convenience of “affording” these expenses upfront might seem great at first, but are likely to lead to a complicated habit of more overspending.
At Less Debt, we deal with countless clients who are facing credit card debt and offer viable solutions that can help pave the way to a debt free existence. Although credit cards are convenient at times, the idea of virtual money can make it easy to overspend or lose touch with reality. If you know that you have a tendency to overspend or are already in debt, it is better not to apply for a credit card at all.