When we have a credit card, we will never have to repay it right away. However, each month we will receive a statement which will say how much was spent and will give us repayment options. There will be the option to repay everything we spent, or a minimum amount of money. Repaying in full is the best option for most people for a several reasons.
It can be a good idea to consider the cost of not repaying the card. You will find that the statement that you receive will tell you exactly how much interest you will need to pay if you only repay the minimum amount of the card. This might not look like a great deal of money, especially compared to how much you have spent, but think about the fact that if you do repay the card in full, you will not have to pay this money. Also think about the fact that this will add up. If you do not repay more than the minimum balance on the card it can take years to repay it all, assuming that you do not spend any money on it. This means that you will accumulate a lot of expenses over this time and it is a good idea to think about how much that might be and whether you are happy to pay that much money just for keeping that debt. Most people would not want to pay it, if they worked it out properly.
If you do not repay what you owe on a credit card, then you will max it out. This means that you will use up the credit that is available to you and you will not be able to use the card anymore. This means that if you do have an emergency then you will not be able to have the card to fall back on to help you. This could be a problem if you have no savings and need money quickly so it is something worth thinking about. Also if you want to buy something online, then you might prefer to use a credit card because of the security that you get with it compared with other ways of paying for things. Therefore, you may want to leave some credit available on the card for this sort of purchase.
You may find that if you have a lot of outstanding debt then it will have a negative impact on your credit rating. You may not worry about this, but it could impact you in quite a few ways. You will find that when you want to apply to rent a home then the landlord will look at your credit record and this will determine whether they will be happy to take you on or not. You will also find that most lenders will use it, so if you want to take out another guaranteed payday loan the lender will look at your credit report. You may find that insurers will look at it and even some employers. This means that you will need to think hard about what impression you will be making with the credit report that you have based on your credit card status.
You can therefore see, that although it might be really tempting to not repay your card in full each month, there are a lot of good reasons why this might not be a good idea. It is easy to make sure that you do repay it all as well. You can set up a direct debit so that the card is always repaid in full each month. This means that you will not forget but you will have to make sure that you do not overspend on the card as you will need to be sure that you have enough money to be able to repay it.