There are many people that think or believe that we need credit cards when we take out first steps towards being in financial freedom. By purchasing something with a credit card, we think that we are taking control of our expenses and slowly paying them off, but in reality, credit cards take more money from us, than what we actually purchase.
There is a lot about credit cards that we do not understand, and that creditors do not explain very well, they just make us believe that we are paying off the debt slowly but surely and that we need this to have a “better” credit score. In reality, out credit score really means nothing. Its just a number that tells just how much debt we are in, and that says that we are paying our debt and we are making an income.
There are hundreds of people that have never been in debt of any kind, and because they pay everything cash, they actually have a better and cleaner credit history than others. Credit cards are not everything that they seem to be. For one, in order to pay the interest alone on a card, most people will end up paying double the amount of actual debt that they have.
Many people believe that they need to have some sort of debt, or need to pay off something in order to start your credit history. In reality, we begin to build our credit when we open a bank account and start putting money in it.
Most people that pay off their debt, end up paying double of what they owe over time. Why? Because they never actually pay off the debt, just the interest in their credit cards. In most cases, people will pay up to 20% more from what they owe on their credit cards. Worst part yet, they can use that money to save up and buy themselves a brand new car, or put that money towards a new house if they wanted to.
The millionaires and high class entrepreneurs do not have debt. THEY HAVE MONEY! Which means that they don’t really need a credit score, because they know that they can just buy what they need on the spot.
Think about! Do you want to spend $200 paying off something that cost $100 on a credit card?
I don’t either!
I believe that one of the few reasons credit cards are beneficial is for emergency uses only and to help us out when purchasing a home. If you don’t have any type of credit depth, a couple small credit cards that are paid on a regular basis and maintain small balances compared to their limits are a good idea.
If and when you do decide to apply for a credit card, make sure you do your own research to make sure you are getting the best rates and terms possible. Interest rates can vary from 0% up to 30%. Another smart move is to research the credit card issuer and make sure they have a good track record!