Using credit cards should only be a last resort

Estimated reading time: 4 mins

As a responsible adult and father, I understand the importance of budgeting, saving and living within my means. But no matter how hard I try to be financially responsible, there are times when it’s impossible to stick to my plan. In these situations, I know that using a credit card should only be a last resort – and here’s why.

Using credit cards is one of the most expensive forms of borrowing available. Unless you pay off your balance in full each month, you’ll be charged interest on your debt – and this can really add up over time. The average UK credit card charges an APR (annual percentage rate) of around 18%, which is much higher than most other forms of borrowing such as personal loans or mortgages.

The temptation to spend more than you can afford is also greater when using a credit card as it can be easy to forget that you’re actually spending real money – especially if you use contactless payments! This kind of reckless spending or ‘retail therapy‘ could leave you in serious financial difficulty if you don’t keep track of your spending habits and budget accordingly. Credit card companies use all sorts of tricks to get us to spend more.

Credit cards also come with high fees for late payments or going over your limit – so if you do decide to use one it’s important that you make sure all payments are made on time every month. Late payments will not only incur extra costs but will also damage your credit rating which could affect future applications for loans or mortgages.

It may seem like an attractive short-term solution but research has shown that people who rely on their credit cards are more likely to struggle with debt in the long term. A study published in 2015 found that households who use their credit cards regularly are twice as likely to fall behind on repayments compared with those who don’t. It’s clear then that relying heavily on a credit card isn’t always the best way forward when it comes to managing finances responsibly.

In some cases, however, using a credit card may be necessary – such as when paying for essential household items or medical bills. If this is the case then it’s important not to put yourself into further financial difficulty by taking out more debt than can realistically be paid off within the agreed timeframe (usually several months).

In order to avoid getting into unmanageable levels of debt, I always make sure I have an emergency fund set aside before relying on my credit card – this way I know I have something saved up should any unexpected expenses arise. This helps me stay one step ahead by ensuring that any major purchases or bills can still be paid even if my income unexpectedly drops or other unforeseen circumstances occur.

It’s also wise not to let yourself become reliant on having access to additional funds from your plastic friend; instead focus on getting into good savings habits and look at other methods such as overdrafts or instalment loans where possible. Credit should only ever been seen as last resort!

No matter how tempting it may seem at the time – don’t let yourself fall victim to compulsive shopping just because ‘it’s free money’. Credit cards aren’t free money – they’re simply another method for borrowing which incurs interest and fees. Make sure any purchases made are absolutely necessary and always keep track of what has been spent so nothing slips through the net.

To summarise: Using a credit card should only ever be seen as a last resort; due its high cost associated with borrowing money via this method coupled with potential long-term implications for personal finances. If used responsibly however – such as making essential purchases during times when cash flow is low – then they provide an alternative form of payment which can help keep finances afloat. As long as sensible repayment plans are adhered too then they won’t necessarily need lead down a road paved with unaffordable debts. It’s therefore key not take out more than can reasonably pay back.

In conclusion: Credit cards should never become a habit but rather kept reserved for emergencies only. When used sensibly they offer an alternative form payment without having access large amounts cash. But remember; unless repaid full each month interest will continue accrue. So take care ensure all repayments maintained promptly. Take heed above advice stay safe financially sound!

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