Phyllis Wangui

Reasons why not to sign up for a credit card for a newly employed graduate It feels awesome to land a good job after graduation. Upon receiving your first pay check, bank officials will come knocking on your door advertising their products. Something might catch your attention. And this might be a credit card. It will come with the features like Interest free shopping,50 days gross period, discounts at selected stores and items and other attractive features. Just a minute, it may sound like easy money but don’t just sign up yet. A credit card may sound good, but comes with a lot of pitfalls that need to be avoided. The following are reasons why you should avoid a credit card 1. Debt cycle It will place you in a debt cycle. When you borrow at the end of the month, the bank will deduct the amount in your next pay check. This will create a budget hole in your income which must be filled. What happens next is that you will run to your credit card and borrow again. This cycle goes on and on and it may seem easy on the surface but it’s actually difficult to come out of it. 2. Affecting your credit score Late payment will result in lower credit score. This will affect future borrowing and may result in higher interest for mortgage and other facilities. Banks will actually charge high interests for individuals with lower scores. 3. Hidden Charges and high interest Credit cards normally come with hidden charges that are not usually advertised when you are signing up. There are annual fees and the interest rates for ATM withdrawals are usually high. 4. Encourage impulse buying and increase spending With a credit card in your wallet, there is generally the feeling that money is available in your pocket for any purchase. This increases spending on items that you can actually do without or postpone buying. In conclusion credit cards can throw you into a financial crisis. Its important understand the consequences before you apply for them.