If there was one subject in finance that definitely gets people angry, it’s gotta be credit cards. Our society as a whole has a love hate relationship with credit cards. There are plenty of people that actually make sure that they are taking care of their credit cards in a safe and efficient manner, while there are others that simply throw caution to the wind and spend as much money as they can. There are even movies out there that talk about the power of credit cards, and how good it feels to spend money on them. These movies are popular with women, but that doesn’t meant that men get off scot free. There are plenty of movies about getting more and more money, and how having more credit cards leads to getting pretty women and fast cars, as well as big houses.
Are these movies what we actually need to live our lives by? Absolutely not, but the reality is that they are a popular form of escape. Just for a few hours we all get to settle into a world where everything is right with credit cards, and we get to just spend any amount that we like — no budget required.
Thankfully, most of us know that this is just fantasy, but what happens when you really start thinking that you can live your life the way actors do in the movies? You will need to stop and realize why charging up your credit cards is definitely a bad thing.
First and foremost, when you go over your budget — you’ll know it. There will be less money available for the things that you want to get, and this isn’t a good thing at all. It makes people get stressed out almost more than any other topic can, and who really wants to feel that stressed out these days?
Another point that you will need to consider is that if you charge up all of your credit cards, you’re going to hurt your score — even if you were to turn around and pay it all off on schedule. The reason why is that the credit bureaus will see that you’re using a lot of credit all at once, which will tend to make you a bit more risky in their eyes. Your score is primarily based on how many credit cards you have, as well as how high your utilization gets. It’s better to use only half of your credit card’s total limit than it would be to spend up every last bit on your credit card. After all, you never know when you’ll have an emergency that requires you to break out your credit cards. When we say emergency, we mean the real ones –t he times where you get worried for you and your family and have to take quick action to get things stable again. You want to have your credit limit free for that, not for the sweater that was 75% off — at Saks Fifth Avenue, that is.
Overall, there are numerous reasons why charging up credit cards is a bad idea. If you really take the time to focus on getting things cleaned up, you shouldn’t really have any problem at all maintaining good credit!