Why You Need to Ditch Your Credit Card Today

Why You Need to Ditch Your Credit Card Today

Over 9.5 million Canadian households are currently using credit cards. However, the most worrying fact is that the average Canadian who has a credit card debt owes around $8,000. Although credit cards can make your life easier, they also have their downfalls that can easily ruin your financial life. The most significant downside of these cards is the high-interest rate that can keep you in a cycle of debt. Successful people understand that you can’t build wealth with the incentives offered by credit card companies and you can’t beat these companies at their own game. Here are some of the reasons why you need to ditch your credit card today.

It’s Easy to Rack up High Debt

If you are not financially disciplined, credit cards can make it easy to end up in a cycle of debts, and worse, a rapidly growing debt. That is partly due to the exorbitant interest rates that you will be charged. Most people don’t seem to understand the fact that paying the minimum on your credit card debt doesn’t keep the level of debt down. In fact, it might not be productive in any way. It will only keep you in debt for a long time, and you will rack up a lot of profit for the credit card company. In case, you are already in deep debt with your credit card, know that your situation isn’t hopeless. There are so many ways to get out of debt, and you can do it.

Credit Cards Can Ruin Your Credit Score

The dream of every consumer is to build an impressive credit score to attract low interest when applying for loans such as a mortgage or an auto loan. Using your credit card responsibly can help you rebuild credit rating, but chances are, you may be late with one payment, and that is where things might go wrong. Relying on credit cards introduces more risks than benefits. The moment you have a single late payment, your credit score will take a hit. If you also accumulate a lot of debt, your credit utilization ratio will rise causing your credit score to sink. Carrying a credit card balance typically makes you a less attractive borrower to lenders.

Credit Cards Are Designed to Keep You in Debt

The primary objective of credit card companies is to keep you in debt. They usually thrive off your debt, and when you manage to pay it off, they automatically miss out on an incredible amount of interest that you had been paying. That is the primary reason why these companies usually set things up so that any individual who is making the minimum payment and continues to use the credit card each month will never be debt-free.

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