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Why People Are Afraid of Credits?

Julia Beyers Jul 18, 2019
It may be odd but people are afraid of getting credit cards and using borrowed money. A few surveys reveal this problem referred to American millennials, but both younger and older generations also are pretty cautious about credits.
We want to talk about this concern, reveal why customers around the globe don’t rush in taking credits and learn how to use bank loans.
But let’s begin with some stats. In 2014, Bankrate reported that 63% of surveyed millennials in the age from 18 to 29 years old don’t have credit cards at all, while 23% of them have only one card. Simultaneously, only 35% of adults over 30 don’t have these cards.
More recent research conducted by Credible reveals that 33.2% of 500 respondents from 18 to 34 years old find credit card debts the scariest thing. Compare this with 20.4% answered that they are afraid of death and 16.8% talked about the war.
The same Credible study focuses on exact fears. Check them right below:
  • 32.6% – accruing interest.
  • 32% – making monthly payments.
  • 20.4% – relying on credit.
  • 7.8% – not understanding rates.
  • 7.2% – other.
Further, we will talk about each fear in detail.

Top Fears Related to Credits

Money and fears always walk side by side but it’s important to get things clear. If you realize actual threats and potential consequences but don’t get influenced by misinformation, then you can use credit cards safely.
Sadly, people often care about myths and problems that can’t exist at all. Here, you will find five the most popular but baseless fears along with real concerns and way to deal with them.

1. Harm to Credit Score

Some clients are afraid to apply for credit cards because they believe it will destroy their credit score. No! Application is harmless. They relate to inquiries that stand up for only five points. It’s only 10% of a FICO score compared to 65% related to debts and payment history.
Still, these small parts may be crucial for people with a blank credit score so apply carefully.
Real concern: no credit history. Without it, it’s barely possible to get a huge home or car loan. Thus, use credit cards to build a strong score.

2. Data Leaks During Online Shopping

A lot of people avoid using credit cards during online shopping because they are afraid that their sensitive data theft. To avoid this, follow a few precautionary measures. Enable 2FA and push notifications, use virtual cards for Internet only, shop at sites with reliable security, etc. As a rule, online shopping is pretty safe.
Real Concern: fraudulent websites. Still, there are some phishing companies and fake platforms that hunt for your credit card details. Be sure to check domain names and reviews.

3. Unbalanced Spending

Here one of the most famous fears. Some people can go crazy and spend everything at once without repaying. If you realize that you can’t stick to plan, it’s better to avoid using credit cards, really. But it doesn’t mean that you shouldn’t even try.
Design a detailed scheme of using and returning credit money, charge only amounts you can recover, and pay before deadlines.
Real Concern: Too high trust in credit. You can’t survive using credits only. Don’t consider cards as extra income but treat them like a life vest.

4. Evil Creditors

Oh, well. Often, customers think that banks or lending companies are angry sharks that want to steal money or even abuse your problems. It’s wrong. Most likely, banks have efficient plans for their clients who face credit hurdles and can’t repay on time. If you contact a creditor early, you will be able to restructure debt and avoid problems.
Real Concern: loan sharks. There are some teams that operate illegally and apply predatory interest rates. Just don’t deal with them at all, please.

5. Jail

And here’s the king of fears. Borrowers often think that they can go to jail because of their debts. As long as you act according to agreements and don’t try to cheat on, you’re protected with laws. Some collectors may threaten you so just know your rights and remember that there aren’t debtor prisons. In the USA, at least.
Real Concern: wage garnishment and other fines. These penalties are real and legal. Remember about it to save your money and credit score.

Not Only Fears

Apart from the frightening nature of credit cards and credit lines, people also don’t want to get one because of other reasons. They’re quite personal and subjective; so you can expand this list with your own attitude. Still, the mentioned factors affect thousands and thousands of customers in different areas:
- High existing debts. Small credit line or short-term loan can’t save a person who owes a lot already. It all begins with student debts, actually.
- Low level of trust in traditional institutions. According to the Pew Research Center, people don’t love banks because of decreased social trust.
-Significant isolation from real needs. A lot of young people don’t realize that good credit history is required for big purchases. And it starts with credit cards.
Mainly, these non-fears relate to youngsters. Other generations may have other reasons not to apply for a credit card, e.g. fear of the banking industry related to the huge economic crash in post-soviet republics or lack of interest in credits because of low daily needs and high income.

Tips to Begin a Healthy Credit Life

Finally, let’s check how is it possible to build a strong credit history without issues. The next steps are universal so you can start with them if you still don’t have a credit:
- Get a credit card with a low limit. It’s important to start somewhere, huh?
- Opt for good fees, not the best design. You own an ugly card with zero interest rate.
- Use first credits for stable expenses. Consider paying for a gym, Wi-Fi or Netflix.
- Treat the card as a debit one. Don’t overspend to avoid debts.
- Forget about points. Let them accumulating independently.
- Remember about security. Don’t lend or forget cards and keep the number private.

Final Thoughts

Follow simple rules and always study the banking sphere aspects that relate to you. Credit cards aren’t devilish inventions of banks that want to get all your money. They are just a part of the global economy.
Moreover, they can be useful if you’re planning to apply for loans, help your kids with education or buy a property. Credit cards are great entry points for long and stable credit score. Just keep a cool head and stick to plan.