10 Reasons to Avoid Credit Cards

6. They have deceiving minimum payments.
When a credit card bill comes and only a very small payment is needed, many assume that this means their overspending isn't that bad. This small payment, however, will cost you a lot of money in the long run. Credit cards set the minimum payments low to extend the loan as long as possible. This, in turn, means you pay more in interest. Minimum payments are often only 2% to 4% of what you really owe.

7. They encourage impulse purchases.
If you use only cash and don't have the cash to buy something, you can't purchase it. That puts a stop to impulse purchases. This is not true when you have a credit card in hand. When you make enough of those impulse purchases, credit card debt will follow.

8. They increase your spending.
Study after study shows that when you compare people shopping with cash and those shopping with a credit card, those with a credit card will spend more money. While this is good for the stores and for the credit card companies, it's probably not good for your bank account.

9. They encourage you to spend more money than you have.
The goal of the credit card company is to get you to spend more than you actually have, since this forces you to borrow money from the company at a high interest rate. The company will encourage you to splurge on gifts, vacations and anything else they believe you will want. It will also give you a credit card limit that will help you to go into debt. Unless you have the willpower to resist all its advertising, the company will get exactly what it wants.

10. Credit cards will bait and switch.
When you receive that preapproved 0% fixed-rate credit card application in the mail, you assume that when you fill out all the information, you will receive a 0% fixed-rate credit card. What may very well happen is that you will receive an alternative card that has a higher interest rate. Some credit card companies write in the fine print that by filling out the application, you agree to take whichever of their credit cards they decide to send you and not specifically the one that they are advertising.

Credit cards can cause a huge amount of financial damage, so it's important that you understand how to avoid this damage before you apply for them. If you know that you won't be able to resist the temptation to use them unwisely, simply opt out of the system and don't get a credit card. Your finances will thank you for it.

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