10 Must Know Pros & Cons of Using a Credit Card
Swiping a credit card for a purchase has its pros and cons. It may either do good for cardholders when handling it properly or become a detriment. Credit cards provide you great convenience if you can pay your bills in full and on time every month. However, it also can land you deep in debt if you’re unaware of the terms of credit card agreement and carry too many cards. Today, we’ve made a list of top 10 pros and cons of credit cards.
Please weigh up whether a credit card is proper for you with our comprehensive list of its advantages and disadvantages.
5 advantages of using a credit card
Credit cards will be pretty convenient if you’re on your shopping spree and want to purchase different items from different shops. Meanwhile, it will be an ideal option for online shopping too. Besides, you can shop freely without worrying about the currency issues if you go shopping abroad.
2. Emergency Needs.
Having a credit card for the emergency makes a big difference when coming across some unavoidable, unexpected and expensive situations. Such credit cards will offer you convenience and rescue you, and you don’t need to handle any cash crisis.
3. Secure than Cash
Taking a credit card will be safer than taking money in your pocket since cards are recoverable while cash isn’t if lost. Meanwhile, the records of your expenditure will send to you at the end of the month. The records of credit cards can be traceable while cash cannot. Besides, banks offer measures to protect your credit cards when they are lost or stolen.
4. Added Perks
Credit cards companies provide attractive perks such as rebates, cash back on your purchases, and more warranty coverage for products you buy. Some cards even come with free hotel accommodation and free air tickets for users.
5. Balance Transfer
Some credit cards offer 0% interest rate for the first 6-12 months. Therefore it is essential to take advantage of this feature to make the balance transfer. Transferring the balance from one credit card with the high interest rate to another with low rate will save you a good amount of money and sometimes may solve you the financial problems.
5 disadvantages of using a credit card
1. Extra Charges
Credit cards come with a lot of hidden charges. Firstly, there will be a 2% charge for ATM cash withdrawal and a penalty for exceeding the limit of credit cards. Besides, there is a fee for late monthly payment or no payment at all.
2. Debt Trap
New generation cannot live without credit cards which have become an inevitable role in their life. You have to take it seriously since credit cards, unlike debit cards, will offer you more money which is not present in the account. You will tend to overuse it which may lead to a great amount debt eventually.
3. Blowing Your Budget
The biggest disadvantage of credit card is that it encourages people to spend much money that they don’t have in their hand. Meanwhile, most credit cards don’t require people to pay off their balance each month. Therefore, you will owe the credit cards more and more money even with interest rate when you pay the bills off.
4. Introductory Rate Trap
Banks for credit cards often offer extremely low introductory rates credit cards which will draw the attention of most people. However, this will be actually a trap into which people easily fall. The interest rate will level up leaving you open-mouthed when the introductory period ends.
5. Identity Theft
Identity theft fraudsters can steal the credit card numbers easily. And nowadays billions of dollars are being stolen through credit number theft. It will be much easier to steal the information of credit card than cash. Even online crime thrives on stealing the details of your credit cards.