Although a credit card offers you convenience, it is not cash, simply a substitute for cash. You need to have cash in your bank account to pay for all the purchases. So using a credit card to solve your financial problems does not work.

Costs Of A Credit Card

It is very tempting to use a credit card to buy things we cannot afford. However a credit card is not a freebie. It only lets you to postpone your payments for a short time. Should you default, you will pay not only the initial amount, but also interest that can be as high as 30%.

When the credit limit of one credit card is used up, you may go in for another one. It is always so easy to spend. Before you know it, your financial problems have increased, not decreased as you wallow in an ocean of debt. Credit cards have not solved your financial problems, they have compounded it! While you can use your good will and personal charm to stave off repayments to friends and relatives, the credit card is insulated from your winsome personality. There is an interest charge piling up relentlessly and ruthlessly for every days delay. Debt consolidation may come to your help at this time but then you had used the credit card to solve your financial problems, isnt it?

Besides, not all credit cards are free. Those that hand out travel rewards charge a fee. Then again, all the rewards programs come with riders. You may have to shop in places you dont normally patronize or stay in hotels you can ill- afford to avail of some of the rewards. There is also usually a cap on the rewards. Additional use of your credit card will not translate into additional bonus points. For example, every dollar adds a bonus point on a frequent flyer reward program but only up to a point. Additional spending beyond that will not give you any rewards. So perish the thought of using credit cards to sort out your financial woes and earn some rewards as well. Just draw up a budget plan and stick to it.