Do You Need a Credit Card?

November 8, 2021

Paying with a credit card is the safest way to make a payment. However, playing the credit card game does come with many perils, especially when you don’t make your payment by the due date or pay the balance in full.  Applying for a credit card is a significant decision that must be carefully weighed.  There is nothing wrong with using credit cards, but credit card debt itself has become a big problem for way too many of us.

If you’re planning to apply for a credit card, consider first how it can affect your lifestyle and spending habits. Continue reading to find out some of the less talked about pitfalls of using a credit card before applying for one.


Interest Charges

People are lured into opening credit cards with things like 0% interest introductory periods, cash back offers, and rewards programs but ultimately, they are always designed to eventually turn profitable for lender. Issuers of credit cards make money by charging interest, late fees, over the limit fees, and annual fees.


Ease of Overspending

Money spent on a credit card is really future money that you haven’t yet made but will need later on future bills. It is convenient to use credit cards for things outside of your normal budget but difficult to keep track of the money you’ve accrued in debt; and easy to forget what you’ll owe on your next bill. Habitually using credit cards and spending outside of your normal budget can take you backwards financially.  We recommend never using a credit card unless you will have the funds to pay what you have charged in full when the bill comes.


Fine Print

Credit card lenders are not in the habit of explaining all of the fine print in their application process to members, and often they annotate stipulations that are not in the user’s best interest. These can include things like yearly membership fees, arbitration terms favoring the credit card company, heavy cash advance fees, personal data sharing, and hiking your interest rates and fees at will are just a few. Before signing any credit card application, make sure you carefully read the fine print and fully understand what you are agreeing to. 


Credit cards are often advocated for as being of value in an emergency situation, but an emergency fund can just as easily serve the same function without exposing you to the risks associated with using credit cards. At Firefighters Credit Union, we advocate for all of our members to save a minimum of $1000 in an emergency fund to have available when needed. Planning and saving ahead of future costs and financial hardships is generally an effective means of avoiding any need to carry a credit card. For more information or help understanding any of the fine print involved with your credit card, call or reach out to us and we are happy to help.

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