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5 signs you’re just not a credit card person

Credit cards can do more harm than good if you’re not careful.

Many experts recommend having at least two or three credit cards for credit-building purposes, and there are a lot of great reward cards that offer major savings and benefits.

But if you don’t handle your cards carefully, the positives can very quickly outweigh the negatives — 23% of Americans say they couldn’t manage their budget or finances without a credit card. If you’re among that group, it might be time to make some adjustments to how you use credit cards. So, here are five signs credit cards might not be your thing.

1. You have poor credit

The unfortunate thing about the world of borrowing is that you’ve usually got to have good credit to be able to get credit. And while you can get a credit card with bad credit, that can mean getting stuck with high interest rates, and you may not qualify for the best cards out there.

Solution: Work to improve your credit score to increase your chances of qualifying for lower interest rates and credit cards with worthwhile perks. There are many starter, secured credit cards backed by a security deposit with lower credit score requirements, and credit-building cards that are backed by a bank account that often lack hard credit checks and interest charges.

2. You don’t have a budget

If you don’t have an expense or spending budget, how can you properly manage spending on a line of credit? Without a set spending limit you’ve set for yourself, you can be at risk of overspending with your credit card and struggling to repay your balance.

Solution: Craft a budget. Your credit card usage should be included in your budget, which would mean factoring in living expenses tied to the credit card and leisure spending. Two popular budget methods include the zero-based and the envelope methods.

3. You’ve maxed out your existing credit cards

If you’re not in a major financial crisis and your credit cards are maxed out, it might be time to kiss your credit cards goodbye. Having maxed-out credit cards can not only harm your credit score, but it also means you’re probably in massive debt that will take time to repay. And even if you did manage to repay your balances over time, you might be at risk of doing it again if you don’t adjust your spending habits.

Solution: You can pay off your debt and close the accounts, but closing out multiple credit cards can negatively impact your credit history. If you want to avoid that credit score damage, stop using the cards and work on paying off your owed balances, and storing the cards away to avoid using them for a while. You can also consider a debt consolidation loan to help organize your debt and speed up the repayment process.

4. You’re a chronic late-payer

This is harsh, but no matter the reason why you’re late on payments frequently, late payments and credit cards are just a bad combination. Credit cards tend to have high late fees, usually around $30 to $40 per late payment — ouch. On top of that, if you frequently forget to pay off your credit card balance, you’ll accumulate debt and interest charges.

Solution: You can either set reminders on your phone for payments, use a budgeting app that sends push notifications for bill payments, or simply set up autopay. For many credit cards with automatic payments, you can often choose between just making the minimum payment, a predetermined amount, or the full balance each month.

5. You don’t have an emergency fund

Emergency funds are exactly what they sound like: A bunch of cash you have at the ready to help pay for financial emergencies. If you don’t have an emergency fund, your credit cards might be your only solution in a financial crisis. Using a credit card for a financial emergency can just make things worse for you long term because you might have to pay interest on your borrowed funds and deal with the mental strife of having more credit card debt.

Solution: Start an emergency fund and save at least three months of living expenses to avoid using credit cards in a crisis. To save even faster, consider putting your savings in a high-yield savings account so it can continue to grow passively.

Bottom line

If you’re considering credit cards as a way to build credit history or get those tasty rewards, you’re not wrong, because they can certainly offer those things. But credit cards can also cause major damage to your credit score with poor management, and can easily lead to a massive amount of debt if you can’t reign in your spending. You have to be able to manage them responsibly to yield the benefits.

There’s also no rush to get a credit card if you don’t think you’re ready — banks aren’t going to stop offering them anytime soon.

About the Author

Bethany Hickey is a personal finance writer at Finder, specializing in banking, lending, insurance, and crypto. Bethany’s expertise in personal finance has garnered recognition from esteemed media outlets, such as Nasdaq, MSN, Yahoo Finance and AOL. Her articles offer practical financial strategies to Americans, empowering them to make decisions that meet their financial goals. Her past work includes articles on generational spending and saving habits, lending, budgeting and managing debt. Before joining Finder, she was a content manager where she wrote hundreds of articles and news pieces on auto financing and credit repair for CarsDirect, Auto Credit Express and The Car Connection, among others. Bethany holds a BA in English from the University of Michigan-Flint, and was poetry editor for the university’s Qua Literary and Fine Arts Magazine.

This article originally appeared on and was syndicated by

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