When you are a little holding back on cash, what can be a better option than swiping your credit card? This is the easiest way for buying stuff instantly. But swiping a credit card often is really not good. It was leading to bankruptcy. A credit card does not help in improving the financial climate. It does the opposite. So before you swipe off your credit card here is what you need to know.
Any time before swiping off your credit card you need to have a clear cut idea of the availability of credit. These days majority of the banks have some spending limits but you need to avoid exceeding these limits. Based on the credit score your interest rate will be decided. It is a bad habit of paying off your rent or mortgage through a credit card. It is like you are trying to clear off one debt by creating another debt. The debt is just circulating round and round. Therefore it is bad to pay mortgage or rent money with a credit card.
Also if you are paying your taxes with credit card then you will have to pay 2-3% convenience fees of what you owe. This will be an additional interest rate on your credit card. And because of this you will also not get another credit card from the same bank as it will be a major risk for the bank. Again some people have the habit of paying the medicine bills with a credit card. This is another way of piling up the debt. Doing payments through a credit card will only give you a bad credit score.
In the same way, paying off your education loan through credit card will put you in the bad light. It is obvious that you cannot pay the whole amount at once and clearing the education debt in installments will only affect your credit score. You will also be charged heavily on the interest. And if your college is accepting credit card then they will also take some 3% of the money as processing fees.
When it comes to big occasions and parties like weddings, whatever you spend has to be totally worth it. You will end up in creating a credit limit to meet your desire wedding dreams or whatever occasions it is. Such spending is most likely to damage your credit score which will lead to a major problem in the future.
