3 Signs You’re Not a Credit Card Person, According to Money Expert Seth Godwin

Personal finance influencer Seth Godwin says your financial situation can signify whether credit cards are right for you. He pointed to three signs you’re not a credit card person and says you should pause your use if any of the following apply to you. Even if you don’t use credit cards, these signs may indicate your finances need attention .

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1. You Don’t Have an Emergency Fund

People without emergency funds must often rely on credit cards to cover unavoidable, unexpected expenses. Godwin said this is a “great way to ruin your finances.” He advised ditching the cards until you build an emergency fund covering three months of essential expenses.

Many financial experts recommend having an emergency fund covering three to six months of essential expenses regardless of your credit card habits. However, saving can be difficult if you have to go into debt any time an expense arises that you can’t cover.

If you stop using a credit card for emergency expenses and save an emergency fund in a high-yield savings account instead, you can earn interest rather than accrue it.

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2. You Carry Balances on Your Credit Cards

Godwin also advised not to use credit cards if you can’t afford to pay your entire statement balance every month.

According to Federal Reserve data, as of May, the average credit card APR was 22.76%. Each month you carry over a credit card balance, you accrue interest, perhaps significantly if you have an average APR.

Using a debit card or cash rather than a credit card can allow you to pay off your credit card — and stop accruing interest. Plus, the less money you must put toward debt each month, the more you’ll have for savings and other financial goals.

3. You Aren’t Investing

Godwin believes if you can’t afford to invest, you can’t afford a credit card. He advises younger generations that investing is essential for anyone hoping to retire someday.

Regardless of age, if you haven’t retired, you should be saving for retirement. However, younger people have the advantage of time when it comes to saving, which provides two significant benefits. First, compound interest has more time to grow your savings when you start early. Second, you can consistently save smaller amounts over time, making it easier to balance with other financial goals and commitments.

Money experts often recommend saving 15% of your pre-tax pay for retirement. However, if you can’t afford 15% right now, start with a smaller, more manageable amount and make saving a habit. Then, try to increase that percentage annually until you reach 15%.

Are You a Credit Card Person?

Maybe these signs indicate you’re not a credit card person right now. But that doesn’t mean you can’t take the steps Godwin recommended to become one.

If you start using credit cards again, to avoid charging more than you can pay in full, Godwin has a helpful hint: Pay off charges weekly rather than wait for that monthly statement. A weekly check of your charges may make it easier to spot — and stop — any overspending.

This article originally appeared on GOBankingRates.com : 3 Signs You’re Not a Credit Card Person, According to Money Expert Seth Godwin