Author: Dan Rafter / Source: Wise Bread
There are plenty of smart reasons to apply for a credit card. Having a credit card can give you financial flexibility, provide a way to build or boost your credit, and offer a range of valuable rewards, cash back, and perks. But having plastic at your disposal is not all fun and games.
Having a credit card can cause problems if you’re not quite ready for one. How do you know if you’re not ready for a credit card? Here are a few surefire signs.
1. You don’t follow a budget
The key to using a credit card properly is knowing how much you can afford to charge each billing cycle. The goal is to make charges during the month and pay off your balance in full every time your payment due date rolls around. This way, you’ll steadily build your credit history along with a strong credit score. But if you don’t have a budget, you won’t know how much you can afford to charge each month.
Before applying for any credit card, make sure you’ve drafted a budget that includes your monthly expenses — including those that change each month and those that are discretionary, such as entertainment and eating out — and your monthly income. This will provide a guide for how much you can afford to put on your credit card without running a balance from month to month.
Running a balance is a huge financial mistake. Credit card debt comes with high interest rates, and if you don’t pay off your balance in full each month, that debt can quickly grow out of control. (See also: Stop Using These 5 Excuses Not to Budget)
2. You’re often late on other payments
Do you struggle to pay your landlord on time each month?
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