4. Making all of your transactions with credit cards
Credit cards can be valuable tools for managing cash flow, earning cash back, or simply avoiding carrying cash everywhere you go.
However, using them for all of your costs is risky.
We recommend avoiding swiping to cover significant expenses such as medical bills, rent, or utilities.
While it may appear more convenient than cash or check, this convenience might be accompanied by costly fees and interest accumulated over time. Instead of adjusting your spending to optimize the payoff of the specific program, your credit card should fit with your spending patterns.
5. Do not use credit cards at all.
Many frugal enthusiasts advocate cash-only living as a budgeting method. Avoid the interest, payment discipline, and stress of credit card use entirely.
Credit card use increases your credit score, which can help (or hurt) your financial profile. Credit checks are essential tools used by potential employers, renters, and vehicle dealerships to assess your suitability as an employee, tenant, or buyer. Refusing such a powerful tool can be as damaging as misusing it.
To Summarize
When it comes to credit cards, ignorance and misuse can have disastrous financial consequences. Avoid these risky blunders by learning the truth about credit card usage. Make your monthly payments full and on time, and you’ll view rewards for their benefits for consistent spending, not inducements to splurge.
