Saturday, June 22, 2024

Latest

Related Posts

5 Reasons You Should Think Twice Before Using Your Credit Card

Affiliate Disclosure: Some links on Spotcovery.com are affiliate links. If you click and purchase through these links, we may earn a commission at no extra cost to you. We only recommend products and services we believe will provide value to our readers. Thank you for your support!
spot_img

Each shopping reason may look a bit different, but one thing will probably remain the same – you’re likely to get one or two pitches for a store credit card. You may get the pitch online instead of at the register. But the gist will be a deal for a credit card that’ll earn you rewards, points, or discounts. 

That sounds great, right? After all who wouldn’t want to save cash? But there are a few reasons why you should think twice before using your credit card.

Become an insider.  Subscribe to our newsletter for more top trending stories like this!

Join our Spotcovery Global Black Community Facebook Group for early access to exclusive content and to share in a lively discussion.

High-Interest Rates

Credit cards commonly have higher interest rates than other forms of borrowing, such as car loans and mortgages. These rates vary depending on credit score, card issuer, and the type of card. 

For example, if you’ve a credit card with an annual percentage rate (APR) of 20% and you carry a balance of $1,000 without paying it off, you’ll accrue an extra $200 in interest over a year. To worsen things, you’ll need to pay interest on both the original balance and any accrued interest if you don’t pay it off quickly. 

Check these guides on Amazon to learn how to deal with high-interest rates.

Security Concerns

When using a credit card, security is a big concern. The primary is credit card fraud. Internet scammers try to use different means to get your card information. Hacking into online databases, phishing scams, or installing skimming devices on ATMs or point-of-sale terminals are some of the ways fraudsters try to steal credit card information. 

Once they get hold of your card information, they can make unauthorized purchases or engage in other financial activities in your name. Moreover, security is also a big concern when making online payments. Although many websites use secure protocols to encrypt data during transmission, there’s a risk of data breaches. 

People Also Read: 6 Credit Card Uses Every African American Should Know

Impact on Credit Score

Your credit score shows lenders your creditworthiness and it’s influenced by different factors, including credit card usage. When you use your card responsibly, you improve your credit score

Using your card responsibly involves keeping your balance low relative to your credit limit and making timely payments. On the other hand, carrying card balances or regularly missing payments, negatively affects your credit score. Here are guides on Amazon that can teach you how to improve your credit scores. 

Fees and penalties

Credit card issuers usually impose fees and penalties, especially when cardholders don’t meet the card’s agreement. For example, if you don’t make the minimum payment by the due date, chances are you might incur some extra charges.

Become an insider.  Subscribe to our newsletter for more top trending stories like this!

You may also face an over-limit fee if you exceed your credit limit. Some cards have annual fees and this fee varies depending on the card type and benefits it offers. 

Additionally, credit card issuers often charge a fee when you transfer a balance from one card to another. It’s usually a percentage of the amount being transferred. 

People Also Read: Christmas Shopping on a Budget: How African Americans Can Avoid Overspending

Psychological Effect

You aren’t exactly draining anything in your account so you don’t have to pay anything at the time you’re buying something. This makes buying items with credit cards psychologically less painful.

In general, credit cards for purchases can make you feel detached from the physical act of spending cash. Unlike handing over cash physical cash, swiping cash can feel less “real” during the time of purchase. This makes it easier for you to overspend or make impulse purchases without thinking about its impact on your finances. 

When you use a credit card, you’re taking out a loan that you’ll need to pay back. That’s why it’s essential to consider these five reasons before using your card. Check these books on Amazon to learn how to use credit cards responsibly. 

People Also Read: Save for Christmas and Boost Your Black Family’s Holiday Experience

Nearly 80% of consumers visit directories with reviews to find a local business. List your business for free in our exclusive Spotcovery Black-Owned Business Directory.

Spotcovery offers unique and fresh daily content on Black culture, lifestyle, and experiences. We talk about everything black, black people, black-owned and black-owned businesses. We also deliver authentic and relevant content that will inform, inspire, and empower you! The future of black media is critical to today’s black experience! Our primary audience includes African Americans, Africans, Afro-Caribbean, and people of African heritage. Black culture is for the culture!

Become an insider.  Subscribe to our newsletter for more top trending stories like this!

Affiliate Disclosure: Some links on Spotcovery.com are affiliate links. If you click and purchase through these links, we may earn a commission at no extra cost to you. We only recommend products and services we believe will provide value to our readers. Thank you for your support!
Uchenna Agwu
Uchenna Agwu
Hi there! I’m Uchenna Agwu, and I love to write. When I’m not writing, you can usually find me reading books or watching documentaries (I’m a bit of a nerd). But I also like to get out and explore – whether that means going on hikes or checking out new restaurants.

LEAVE A REPLY

Please enter your comment!
Please enter your name here
Captcha verification failed!
CAPTCHA user score failed. Please contact us!

Popular Articles