In a day and age when all we want is convenience, credit cards are just the perfect financial tools. Millenials, in particular, have practically replaced cash with credit cards when making most of their purchases. But while easy to use and convenient, why do a lot of people hate credit credits?
There are actually several reasons why credit cards have a notorious reputation among some consumers and financial experts. At the top of the list are the hefty interest rates and fees. Card issuers bleed consumers out with said fees and charges. The cost is especially high when you’re not a diligent payer of your debt like most people are.
Then there’s also the psychological aspect that owning a credit card has on consumers. When you’re completing purchases with a card, you are more likely to complete said purchases and often impulsively. All you really need to do is swipe the card and achieve immediate gratification. Again, like most people, it’s the kind of lure that’s very difficult to resist.
With credit cards, you don’t have to worry about scarcity which is not the case with cash. You get to swipe to your heart’s content without worrying about the bills at least for now. Banks also don’t check whether you have enough balance on your savings account. So long as you have are within your credit limit, you can shop till you drop.
To be able to shop even without cash and pay it later usually just the minimum of your monthly is where the real problem with credit card lies. Credit cards encourage consumers to spend money they don’t have. Because it’s a convenient financial tool, the chances of overspending is higher leaving the consumers in a pool of debt while the banks are earning top money via high interest rates.
While credit cards are not bad per se, it’s very important to realize that they financial tools that only work when used reasonably and intelligently.