Advantage and Disadvantage of Credit Cards
If you ask most people why they have a credit card, most will tell you for the convenience and in case of emergencies. Both of these are valid points. The convenience lies in having the card with you at all time and maybe not having cash for groceries or gas. Emergencies arise while traveling or with kids in college in which having a credit card comes in very handy.
Some cards offer rewards for regular use, so people who are disciplined enough to use it and pay it off each month can benefit. It can be used for utility bills, household items, and other expenses that would normally be paid for with a check. Other uses include travel and unplanned expenditures, such as a new water heater. Having access to these types of funds can be extremely advantageous.
However, credit cards do have disadvantage, too. While they can give you access to quick cash in a pinch, it is not free money. It is a loan and can come at a high cost if not paid off in a timely manner. Some people don’t realize this and can abuse the use of their credit card, only realizing the damage when the statement comes a month later.
Late or missed payments can add to this balance and may cause the interest rate to go through the roof, while your credit rating hits rock bottom.
The best way to use a credit card is wisely; but purchasing only what you can afford to pay back a month later. If long-term purchases are unavoidable, then use a credit card with generous annual percentage rates (APR) and payment grace periods.
The key to using a credit card in a smart way is by reading all of the fine print and making sure that you can adhere to the terms set forth by the financial institution. When used properly, a credit card can be a good way to establish credit and make life a little easier.
Quick Tip #1
Although it may be overstated, there is a lot of truth to people ruining their credit score due to missing payments and
paying their credit card bills late. The fees can pile up and the interest rates can grow before you know it.
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Quick Tip #2
Never let your cards go out of your sight and always check your receipts and your card statements thoroughly.
These are simple ways to prevent credit card fraud happening to you. If you do see a suspicious credit card statement,
then call your credit card company straight away and cancel your cards. |
Quick Tip #3
Today’s cards offer a wide range of excellent features, including frequent flier points, programs that bank points toward a new car
and cards that support charitable organizations. Other options worth having include car rental insurance coverage, trip cancellation coverage
and extended warranty coverage. |
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