Should I Pay off my Credit Cards?
There are some people that never have any credit card debt and there are others that have lots of outstanding debt. It can therefore be a bit confusing knowing which might be the best to do.
Why Pay off a Credit Card?
When you do not repay your credit card in full, you will end up paying interest on the money that you owe. This is like all loans where you will have to pay for borrowing the money. However, a credit card is a bit different, in that you get the option of some interest free credit and then to repay what you owe before paying any interest. This is because you will shop with the card and accumulate debt on the card. When the statement comes to you, you will then be told how much you spent and be given the option to repay everything you spent without any additional cost. This is therefore interest free credit. However, if you choose not to repay it all, then you will be charged interest on what is outstanding. This means that if you do not pay the card you will need to pay this interest and it can be quite high. Credit cards tend to be an expensive way to borrow compared with other borrowing options as well and so if you cannot afford to pay it off, then it can be worth looking for a cheaper loan to pay it off with. It is also worth making sure that you only use it to buy things that you can afford to in the future.
Having it paid off will also allow you to have more credit available to you when you do need it. It means if you suddenly need money quickly, you will be able to access it using the credit card. It can give peace of mind knowing that the credit is available and it can also give peace of mind knowing that the debt has been paid off and you do not owe anyone any money. Some people worry more about being in debt than others though. Some feel that the cost is worth it because they are able to buy more things and are happy to pay that cost for it.
Reasons for Not Repaying a Credit Card
It might therefore seem common sense to repay the credit card off and then you will be able to stop paying the interest. Financially it does seem to be the best idea, but there might be a few situations where it could be better to keep the debt unpaid. If you will struggle to repay it and not be able to afford other things, then it is a good idea to not put lots of pressure on yourself to repay it. Obviously, it would be good if you could do it, but if you need the money just to cover your necessities then it is something that you will have to wait to do. Do not let it become a big stressor as this could just make you ill. Repay the minimum and then take a methodical approach by thinking about a plan that you can follow which will help you to pay it off slowly. This should help you to feel that you are doing something to help your situation but without the urgency and stress that could follow. Trying to repay really quickly may just not be possible and you may even find managing more than the minimum is not easily possible and that you would have to get a second job or go without basics if you tried to do that and so delaying repaying the card could be the right thing for you to do in this specific situation.