11 Reasons not to apply for Credit Card

Despite the economic slowdown and deteriorating consumer confidence because of the rising inflation rate in the UK, the use of credit cards continues to grow steadily. Credit card transactions have crossed the 924 million figure amounting to £50.7 billion. According to an estimate, approximately 60 million credit cards transactions per day will be done by 2026. In October 2017, the value of credit card transactions was 16.77 billion British pounds.

UK Market

Number of annual credit card payments in the UK from 2014 – 2018 (in millions); Source: Google

Growing Dependency upon Credit Cards:

More and more people in the UK are using credit cards for getting instant credit facility to make the purchases. The social acceptance of using credit cards is increasing because of multiple benefits. Carrying credit card is safer than to take cash. It protects the money from being lost or stolen. Smart use of credit card may help you build credit rating stronger because the credit card payment history is a crucial part of a credit report.  Getting cash facility free of interest for a few days is a significant attraction. The 0% interest period allows you to repay the used funds without paying any attention; in case, you fail to repay incomplete, you are free to spend as much as you can do. The numbers of credit cards issuing brands offer promotional schemes also including the reward points and cash backs. Section 75 of the Consumer Credit Act, 1974, allows for requesting chargeback at credit card company if the made purchase is not as it is described or the seller refuses for prominent refund return. Credit cards work in multiple currencies; however, conversion charges are applied. A credit card gives a dependable line of credit for emergency hours. Credit cards are a great help to make the payments at a scheduled date that otherwise will reflect on credit history. The credit card benefits are good to see, but thee carry some reasons also for not to get a credit card.

Related: The Best Credit Cards For 2019- An Overview

11 Reasons for Not Getting a Credit Card:

There are too many benefits of using 2-3 credit cards, but you need to be extra careful for not making some common mistakes that make ‘not getting a credit card’ a better option.

  1. The high-interest rate on the dues after the interest rate free period is too high; the mounting contributions trap the users for the longer than the expected under debt net besides harming the credit score. Even in some cases, the user pays more as interest amount than the amount for which he made purchases.
  2. Credit damage occurs silently about which most of the users are not aware. Each usage is reported to credit bureau agencies. If you use more than 50% of credit limit, it is certainly going to harm your credit score making the borrowing difficult in future. Each missed payment is recorded at credit file; and, remains there up to 5-6 years.
  3. The numbers of cases registered against credit card fraud have increased many folds in the UK. Fraudsters target the people looking for instant cash help by anyway. Some users compromise with the legal standards and become the prey for fraudsters. Identifying and dealing with credit card fraud is still time-consuming, challenging and stressful experience. As technology is evolving fast, the numbers of credit cards frauds are also increasing.
  4. The numbers of financial institutions make it expensive to use a credit card for getting cash by applying cash advance fee up to 3% of total transaction amount. The cash withdrawal with credit card attracts an 18-22% interest rate that is too high to manage with constraint income.
  5. Different credit cards users charge different annual fees. Some agencies offer credit cards free of annual fee also, but there are other hidden expenses. The yearly cost of using a credit card may be around £25 per year in addition to interest rate amount.
  6. Numbers of fees charged come to your notice only when you get the statement. The commonly charged fees that often occur as the financial blow is to miss a payment, overseas transactions, balance transfer etc. If you use more than the credit limit, you are more likely to pay a fee.
  7. The perfect use of credit card needs t lot of financial discipline. You must be careful for not doing overspending under the influence of lucrative temptations to do so even if you have expending limits pending. Spending needs are to be closely monitored, statements need to be read carefully, balances need to be paid off on time. Failure at any stage may lead you to tough to handle debt problems.
  8. The numbers of credit cards issuing agencies make false promises for discount deals, reward points, and cash back offers etc. If the payments and fees are totalled, these promised benefits stand nowhere.
  9. Using a credit card is too easy as you have the freedom to expand. Limiting this spending habit is a great challenge especially for the youth community. Many times, the buyers don’t explore other sources to buy a thing just because of buying ease at a particular cause; and in most cases, these purchases are made at a higher rate.
  10. Using too many credit cards is stressful. It causes anxiety, mental illnesses, anger, depression etc. because of mounting dues. If you have other debts also; it becomes more difficult to pay the due amount on time from the amount spared after meeting out regular expenses.
  11. Making minimum payment is a widespread habit, but it continuously dents the credit history. Making minimum payment may save you from a hefty penalty, but the pending dues are marked on credit report to secure the future borrowing more challenging.

Related: Why Was My Credit Card Declined? 7 Common Reasons

Concluding Note:

A credit card is an excellent facility for any time purchase without having adequate cash in an account, but it is good only if you can get the funds to pay back the dues incomplete before the scheduled date. The smart use of credit cards delivers multiple advantages which are more beneficial than the probable disadvantages. Choosing the best credit card type from the top agency is the best way to use interest rate free money for short-term.

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