5 Signs That You Shouldn’t Be Using Credit Cards

Just like almost every child wants a puppy and thinks they can handle the responsibility, many adults are seduced by the promise of a line of credit and convince themselves they won’t screw it up and end up buried beneath a mountain of debt. Before you take the plunge and get a credit card, a bit of honest introspection could prevent you from trapping yourself in a plastic jail cell.

The folks at Credit.com have put together profiles of the five types of people that should “avoid credit cards like the plague,” so if any of the following categories hit close to home for you, it is probably in your best interest to stick to debit cards for the time being.

1. You’re not exactly great at paying bills on time.

Even though they have money to pay their bills, some people are just really not diligent about keeping up with monthly payments. It’s not until the cable company — or the phone company, electric company, insurance company — reminds them of their overdue notices that they take action and pay what’s owed. But screwing up your credit card payments can wreak a lot more havoc on your life than just having your cable cut off for a day or two. Interest accrues, late fees pile on, and interest rates can increase… all making it more difficult to keep up with bills you were already behind on. Your credit history can end up tainted, which can impact things like finding a job, buying a car, or even renting an apartment.

2. You’re a college student living on ramen and “couch change.”

Recent regulations limiting on-campus marketing by credit card companies have severely cut down on the number of credit cards being taken out by college students who don’t know better, but virtually penniless teenagers can still get a head start on tanking his/her credit history by getting a credit card with a super-high interest rate. And some, in their naiveté, will assume they can just make the minimum payment every month and be fine, not realizing that interest is snowballing.

3. You want to earn credit card rewards but can’t afford to pay your bill in full.

Airline miles, cash back, hotel points, shopping rewards, mortgage principal relief… there are many ways that credit card companies tempt you into using your card. Problem is, these rewards aren’t free if you’re paying too much in interest and fees.

If you’re the kind of person who deliberately uses a card to earn the associated rewards but you’re carrying a hefty balance on that card, chances are that you’re losing money in the long run.

4. You use a card for regular expenses but the balance never goes down.

There’s a widely held misconception that it’s no big deal to carry a balance from month to month so long as it doesn’t go up. We hear it all the time — “I tend to just have a few hundred dollar balance on my card, but it doesn’t get out of control.” Maybe not, but it means that you’re just constantly amassing interest.

“These cardholders might be deluding themselves into thinking that they are behaving responsibly,” writes Credit.com’s Jason Steele, “but they are paying an inflated cost for everything they buy.”

If you’re putting regular expenses on your credit card without paying off the balance, you are living beyond your means and should trim your spending so that you’re not financing your supermarket purchases.

5. You really don’t care about fine print.

If a cashier at the clothing store convinces you to save 20% off your purchase today by getting a store-branded credit card, is your first thought “Sign me up!” or “What’s the catch?”

Because those cards often come with sky-high interest rates or tricky deferred interest plans that promise 0% interest for 6-12 months but will kick you in the butt with all the interest if you haven’t paid off your purchase in full by the end of that term.

And it’s not just store-branded cards that are problematic. Many credit cards have potential gotchas hidden in the fine print of their disclosures, and lots of people don’t take any time to read this information.

Our rule of thumb is that the more tempting the promotion for a credit card, the more you need to take a microscope to that fine print before you sign that application.