Although many people rely on credit cards, research points to decreased credit card use. The reasons why someone might discontinue using credit cards varies, but prolonged debt, and surplus of information about credit card interest rates can contribute to the decline in credit card usage.
Using credit cards and not paying them off monthly can be detrimental to your credit. The major downsides of using credit when you don't have the cash to pay it off later—besides the high-cost interest—includes hurting your credit, straining family and friend relationships, and ultimately bankruptcy.
Disadvantages of using credit cards
Credit Card Interest, Fees, and Identity
You'll be charged fees for making a late payment. Fees add up quickly, and they are added to your balance. This means your fees are then charged interest as well. Having a credit card puts you at risk of credit card fraud.
Closing a credit card can certainly hurt your score, but strategic planning can limit any damage. Closing an unused credit card could also be the right move if you're struggling to manage your credit card debt.
If you allow your spending to get ahead of you and you're not organized when managing payments and accounts, credit cards may do more harm than good. If and when you decide to apply for a credit card, make sure you pick the one that's best for you.
At a minimum, you should pay your credit card bill before its statement due date. Paying a credit card after this due date can result in hefty late fees and, depending on the credit card, an increased interest rate.
If you have a good credit score, you'll almost always qualify for the best interest rates, and you'll pay lower finance charges on credit card balances and loans. The less money you pay in interest, the faster you'll pay off the debt and the more money you have for other expenses.
What will happen to your credit score if you do not manage your debt wisely? Your credit score will go down.
The Best Credit Cards of 2021
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