you've been approved! 5 reasons why this is a bad thing

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You’ve been APPROVED! 5 Reasons Why This is a Bad Thing


Carl is just like most people. He isn’t making as much money as he’d like to, and sometimes runs into unexpected expenses.


His car wouldn’t start. Then he needed to buy Christmas gifts.


Here are five reasons why.

So he did what most people do. He applied for a credit card, and in a few days, he was approved!

Opening a new line of credit can do a lot of good in the long

run. But getting a new card isn’t always a good idea.


#1 Having a card means you might spend more than you should.


Life throws us a lot of curveballs. Like Carl, sometimes your car breaks down, or you have to do some last minute shopping.

Opening a new card encourages you to spend

more than you should.


While it can be inconvenient having to budget yourself better, especially

through hard times, in the long run it is essential.


#2 Opening a new line of credit can

hurt your credit score.


Your credit score is incredibly important, and many

things can affect it.

One thing creditors look at when deciding whether or not to give you that new

mortgage or car is how much new credit you have.


And if you open too much

credit, you’re less likely to

be able to apply for a loan.

Applying for many cards at

once looks suspicious, and

can be a warning sign.


Creditors look at your ability to pay back your

debt, and there’s always a risk you might

run up balances, pu=ng you in a difficult posi?on to pay for your home or car.


#3 Depending on the card you apply for, the interest rate may change.


Beware of fluctuating interest rates.

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Sometimes creditors offer a low introductory rate, which will change after

the first six months or a year.

So when you’re expecting to pay a certain amount back:

S U R P R I S E ! You owe more than you think you do.


Fluctuating rates often come from those pre-approved cards you receive unsolicited in the mail.

Always check your interest rates and open

mail your creditors send you. They’re required by law to inform you when

the rate changes, but sometimes it’s in the

fine print.


#4 They’re harder to pay back

than you think.


While credit cards can be very convenient, and can help you out of a jam, you have to know how to use them.


Unless you pay back your full balance every month, you’re going

to be charged interest.

When that interest is added to the principle, you’re paying interest on it, too.


If you let your debt continue building by only paying the minimum payment, You will often be paying back more than double your original purchases!


#5 You may fall into a debt circle.


You might use your credit card sometimes when you don’t have enough

cash for a purchase. A debt circle

almost always begins with a credit card.

And before you know it, you don’t have any cash because you’re paying your credit cards every month.

As you continue spending this

way, your balance increases.


So you have no choice but to keep swiping!


So what are you to do?


Credit cards can help your credit, but more often than not, they become a hindrance financially.

If you do apply for a card, like Carl,

be sure to use it responsibly, paying back your balance every month.


Using a credit card can help convince lenders

they can trust you, as you establish a reputation

for paying your bills on time.

But beware of all the curves in the road toward financial health. Take a look at our blog and discover

the first steps toward getting back on track, and tips on how to make credit work in your favor, and not the

favor of the lender.


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Want to know more?

Whether you have good credit, bad credit, or no credit at all, you

can find the credit card that fits you best with our tools and advice

today!


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you've been approved! 5 reasons why this is a bad thing

Economy & Finance