I have a personal experience of Credit cards. I knew more about credit card brands rather than the denomination of currency notes. And Yes I landed in a debt soup. Inadvertently you pay more while using credit cards.
Why am I telling you? Well I have learnt the hard way and want to share my knowledge. They lure you into a trap. The luring methods are cash back bonus and reward points. If you miss one payment your credit suffers. So, avoid use of credit cards.
Let us understand with an example. It will give more clarity. You are out shopping for clothes. You have 200 Euros with you. That is your budget and no credit card. So whatever you buy is within the 200 Euros cash with you. Even if you like a dress that is more than 200 Euros, you cannot buy it. Now let’s explore another possibility. You have a credit card and you like a dress which is 300 Euros, much above your budget. But you will think, hey I need to pay later so let me buy it. That is the trap. Here you have spent 100 Euros more than your budget. Surely you have to balance it somewhere else. If you do not balance you will end up paying more on interest too. A recent study at MIT confirmed that people spend more with credit cards than cash. The overspending you do with credit card eats away at your savings. The seller will want you to use credit card, as there are benefits for the seller. Do not play into the hands of the marketer. Go without a credit card and instead use cash. Ferratum gives great advice with easy loans for freedom from debt. So be aware and avoid the debt burden if you can. I want you to avoid the mistakes I did.