We all know how difficult sometimes it becomes to manage credit cards. Also, we know how easily they go out of control and turn our financial lives into a mess. Delay or miss one instalment and the things turn upside down. Added interest rates keep rising manifold day-by-day, and if you do not pay them off at the right time, the life turns into a living hell. Credit score drops, you fail to obtain loans and other financial products; only stress happens in every aspect. The extravagant use of credit cards is responsible for that.
Financial advisors advise to their clients to treat their credit cards as cash to avoid the relatable issues. Follow reasons describe why you should tackle credit cards as cash.
It helps you set spending limits
Just like you spend cash according to its limit, the same applies in the case of credit cards when applied the same rule on them. The urge to spend more and for every small and big requirement causes careless spending behaviour.
- How does it help?
- When your mind has a spending limit, you try best to follow it.
- The list of expenses get smaller due to the set limit
- It inspires mindful spending, which brings a positive change
Replicating the cash practices in credit cards show instant results, and you save a lot of money. It gives a new insight into personal finances and gives way to a better financial future.
No pending payments exist in your life
Just like cash transactions never stay pending and they complete at the same time, credit cards also act in the same manner. When you treat both (credit card and cash) in the same way, the issue of pending or due payments resolve.
- You use the credit cards and pay the instalment at the right time
- It secures the stability of finances because you pay on time like cash
- It gradually improves spending behavior, and credit cards never create an issue
Having no pending obligations on the part of credit cards can be a big success in financial life. Those who have less or no money related issues achieve better levels of peace of mind.
Avoid credit score drop that occurs due to missed credit card instalments
The importance of credit score is ubiquitous, and we know that poorly managed credit cards are their biggest enemy. But if you follow the discipline that is followed while using cash, credit cards do not harm up to that extent.
- With good credit score performance, you do not need to depend on higher rate bad credit loans in Ireland. Borrow money on lower rates.
- With a good credit rating, the financial future remains safe, and it is possible to enjoy financial liberty. It can be your first step towards prosperity.
- The approval on financial products like loans, new credit cards, insurance policies etc. becomes easy. From quick online loans to better investment options, everything becomes smooth.
The credit score is the first introduction of a person in the money world, and it has to be good. With a controlled behaviour on credit cards, one can achieve and maintain them.
A full stop on the urge to take more credit cards
Usually, those people who spend a lot of money are prone to the desire of using multiple credit cards. However, that, in turn, increases the expenses and you miss to differentiate between the desires and the needs.
- When you know that every credit card will have to censor with the spending approach applied to cash, you keep fewer credit cards.
- Less number of credit cards helps keep a good credit mix because there is no excess of one type of credit. Most of the people fail to understand this and bear the bad effect on money life.
- It becomes easy to get better control of financial life. Those with multiple credit cards always fail to tame their money for their well-being.
Most of the people out there are almost addicted to credit cards. They cannot even imagine living without the multiple cards and the need to get more gets stronger day-by-day. Treating credit cards as cash puts a gatekeeper on your spending habits and automatically you want them less in number.
Prevention of bad debt trap
We know that a credit card is already a bad debt, and it gets severe when it turns into a bad debt trap. The series of pending instalments, use of credit cards for every small and big need gradually overpower our lives, and we start losing control on the ratio of income and outgoing.
- Using credit cards with the discipline of cash keeps you away from due instalments.
- When there is nothing pending to pay, there are no chances of the debt trap.
- Besides avoiding multiple credit cards is also a significant factor to avoid the bad debt trap
The above points explain how you can avoid the trap smartly just by embracing a small change in the way you use credit cards.
Money is like an interesting thing, and the financial products are the ways to organize it. Unfortunately, we forget it and make the financial products play a contradictory role. It is our mistake, and we have to improve while doing the right things. The good news is we can change our habits, using credit cards as cash is one among them.