Wednesday, November 10, 2010

Is it possible to live without a credit card?

During the weekend I read an article on the newspaper about how hard it can be to live without a credit card.
Our society pushes us into debt. Marketing campaigns, online marketing, junk mails and other strategies are all designed to lure us into acquiring stuff that we don’t need.

Wait, there is more. A few months ago I was walking on a shopping centre and saw the advertisement on a modest clothing shop. It said something like “buy your clothes now and pay for them later”.
It is very easy these days to get credit and get into trouble with it.

Vanquish credit cards is an example of how individuals with poor credit profiles can acquire a credit card. If you follow the link provided you will see on their home page that the say “…if you use it sensibly…”. That is the trick with credit cards, most people don’t have the control not the knowledge to know how to manage credit cards.

Furthermore it is becoming increasingly difficult to live without a credit card. I admire people who want to live without credit cards. My in-laws never had a credit card until a couple of years ago when they wanted to travel and could not book their accommodation.
The article on the newspaper I mentioned above talks about another couple that wanted to travel and could not book accommodation because they did not have a credit card. They offered to pay their entire stay with cash and ahead of time. They were refused because hotel police dictated that they provide a credit card for security.
The couple from the newspaper were clever and offered cash as security which was accepted. However that is beside the point. The hotel made it difficult to book accommodation with them because they did not have a credit card.

 It may be unrealistic to cut up your credit cards

I admire people who make the effort to live within their means however, for most people it is unrealistic. In Australia you need 2 working people to be able to pay for the mortgage and other living expenses.

With the increase of the cost of living many people use their credit cards as an emergency fund. They use it to pay for unexpected medical bills, car break downs and other emergencies. Credit cards are also often utilised as a second source of cash until pay day comes. That is the wrong way to use credit cards.

Avoiding credit card debt

It is important to pay attention at how you use your credit card. If you are utilising it as a source of cash then there is a high chance that your cash flow is negative. In this case you need to reduce your expenses and/or increase you income in order to bring your cash flow into a positive scenario.

Ensure that you pay your credit card balance in full every month so that you avoid paying interest and falling into serious debt issues.

Related Articles
Top 10 money tips to become debt free

Credit card debt – how to avoid it

Managing your cash flow to pay off debt

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