A credit card is a kind of a bank card, and it works as a type of loan. A credit card allows you to buy many things. But instead of having money in the account, you get the credit. The cardholder pays back the owed money with interest. Sometimes you have to pay the fees as well.
The credit card offers many benefits to its users. A credit card is an excellent financial product. You can use credit cards to purchase items like groceries, gas, and other products. It is also an excellent resource for buying a ticket for big games. You can get jewelry, airplane tickets with great ease as well. You don’t have to carry cash anywhere. Some of the prominent advantages and drawbacks of credit cards include.
The Pros of Credit Cards
- More Purchasing Options: Credit card gives you unlimited purchasing powers. You can order anything via phone, internet and directly. Physical shopping depends on cash. A credit card gives you broad choices.
- Faster to Use: Another benefit of credit card is simple and easy to use. Just Swipe your card, and buy what you want. You don’t have to write lengthy checks. Credit cards also save you time.
- Ability to Pay in Installments: You can pay the amount of credit that you owe in installments. If you have the money, you can also pay the amount monthly. The only exception in this option is charge card does not offer any installment plan.
- Fraud protection: A credit card offers protection against fraud and theft. A thief can breach your account, and they can quickly drain your accounts. With a credit card, you have filed a report to the card issuer. He will clear the fraud, and you will have access to your card.
- The Credit Score: Credit card is also useful in improving your credit score. Just make sure to pay your bills timely and keep a low balance. A good credit score also helps to get loan approvals.
- No Need to Carry Cash: Nowadays most places accept credit cards. It means that you don’t have to carry cash. You also don’t need an ATM if you have a credit card.
The Cons of Credit Cards
- You Spend More Than You Can Bear: Credit gives you the illusion of more money. It gives you extra purchasing power. You do not have that much buying power. Many studies have revealed that people are more willing to spend with credit cards than cash.
- Fees and Interest are Costly: Some credit cards have higher interest and costs. It can range from hundred to thousand dollars depending upon the card. It is important to understand credit card terms.
- Potential for Debt: Each time you use credit, you create debt. To avoid this situation, pay the balance in time each month. If you only pay the minimum amount and keep buying. The debt will undoubtedly increase.
- Misuse Can Affect Your Credit Score: Misuse of a credit card can ruin your credit score. If you do not pay the owed money in time, it can affect your credit score.
The Bottom Line
While credit cards have some negative aspects, but if you’re smart in using credit cards, you choose and use them wisely. If you learn to use the credit card responsibly, you can gain maximum benefits from it.
