The Pros and Cons of Credit Cards
What are the pros and cons of credit cards? It seems as if every day there are more and more commercials on television about the best credit card to apply for and how it can be your very best friend in the world but is it your friend? Why do we need credit cards? How are credit cards bad for some people? Learn what the pros and cons of credit cards are?
In the United States and many other countries in the world today, credit cards are the most often used form of currency. You must consider your income and financial situation when deciding whether or not you want or need a credit card.
What are the pros and cons of credit cards?
Pros of having and using credit cards
• Convenience
• Security
• Reward systems
• Perks like insurance, discounts
• Buy now; pay later
You need to be smart with your credit card use. Having the ready cash at your fingertips can make you feel like a king/queen, but it is very easy to fall into the spending trap and, once there, to find it difficult to get out again. It is all about convenience. The little card is so tiny and fits into your pocket so well. It is easy to pull it out to pay for bills; your groceries, gas, and anything that you want to buy. You can do it all with just a flick of your wrist as you swipe the card through the reader. It can also make you feel like you are on an even footing with friends and co-workers. Having a certain type of credit card can even make you “look” important. Some credit cards offer rewards that make you feel like you are getting something for nothing. You should remember that you aren’t. It takes a lot of points to get you even one reward, and those points are only awarded when you spend money on some purchase with the card. Credit cards do help in building credit history, and as long as you pay your bills on time and pay the card off as soon as possible, it can benefit you later on in life.
Cons of having and using credit cards
• Paying interest
• Fees
• Quickly and easily getting in over your head
Late payments are a problem with any credit card, and they don’t help your credit history, either. It is the most difficult part about credit cards. Late payments is one of the things that can ruin your credit. You need to keep up with your payment dates and also pay the cards off as quickly as possible. If you fall behind even once, it becomes harder to maintain a good account. Paying late means that late fees are added, interest is added, there may even be a penalty added. These build up, and then your payments might only be covering the additions and not the purchases you made. Once this begins, you find yourself in debt. Credit card debt is a one-way street. Many people believe that between the fees and the interest that get added, a minimum payment won’t even keep your head above water. Before getting a credit card, the pros and cons of credit cards should be more closely examined.
Some credit card companies have hidden fees. Be certain that you read all of the information on the credit card application before signing it because these charges might not be something you want to be associated with. For instance, credit cards that give big rewards often charge annual fees as high as $100/year. You need to know if you are being charged extra for using convenience checks (many companies charge as much as 10% of the amount of which you write the check). Is there a charge for going over your credit card limit? Many companies do charge this fee, and when you have the card at your fingertips, you might just want to be a little more careful if going over the limit by $5 is going to cost you $100 in added fees.
You should also consider where you use your credit card. Some small businesses and individuals who sell items on eBay, in flea markets and other places may be passing on to you the “swipe” fee that the card company is charging them. The pros and cons of credit cards become clearer when you consider the possible costs you may incur.
There are many pros and cons of credit cards. The bottom line is this. You should not spend money that you do not have. Credit cards are the easiest way to get into this quagmire. Be careful about your finances and consider carefully before getting and using credit cards.
Advertiser Disclosure for the CreditFast website – CreditFast.com, provides information about the best credit card applications, as well as other financial products and services. Our goal is to provide you with fair, balanced reviews. Some credit offers that appear on our website are from companies from which CreditFast receives compensation, and some are not.
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