Credit is a massive part of our lives. It has been for years and it will continue to be in the future. Credit card debt is one of the fastest growing types of debt around and it is very important that you understand the dangers of credit card debt prior to signing up to a credit card agreement. There does sometimes seem an inevitability of credit card use in some aspects of our life, but there are other types of credit that might be a better fit for your situation, such as a short-term loan, or you might be better off planning and living your life without a credit card at all. Here, we take a look at what it’s like to live your life without having a credit card.
There are many reasons why you might want to begin living your life without a credit card. It is a positive thing to try and achieve with your life. The first benefit is that you no longer have to worry about the monthly payments you make to pay off the credit. This includes the total you have borrowed and the extra interest on top. Without a credit card you are not likely to suffer from credit card fraud, which is a problem across the world.
What some consumers find is that when they have a credit card, it can feel like ‘free money’ in a way. This can lead to compulsive purchasing of products and services that you might not actually need, and that you can’t currently afford. It is easy to get into a cycle of credit card debt due to shopping in this way. By only having your debit card and the cash that is available to you each month (once you have taken out your bills, rent, groceries and other essentials), it forces you to take more control over how you budget your finances. It helps you to avoid the risk of going over your credit limit without realising it, meaning extra fees and interest on top. You can only spend what you have.
It is important though to think about the positive aspects of having a credit card. When using a credit card to make certain purchases, it does provide you with a certain level of protection under the consumer credit protection act. It means that you can claw back your payments through the credit card company if you are a victim of fraud. On top of that, using a credit card, or any form of credit for that matter, does build into helping you create a good credit score and a positive credit file. If you are a good payer, making sure that your credit card is paid off every month, or at least that you are making monthly repayment above the minimum figure, your credit score will build. Life without a credit card or any credit at all can actually harm your long-term prospects of gaining credit in the future, for example when you apply for a mortgage because you want to buy property.