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Credit Card Advantages and Disadvantages

Gaining enormous popularity in the past several decades, credit cards have become an indispensable staple of modern society, changing forever the way we make our everyday purchases. In this day and age, credit cards are so widespread and commonplace that many card holders use them without even realizing their general features. The present guide will enlist some of the most typical advantages and disadvantages of credit cards.

Credit Card Advantages

1. Credit cards allow you to buy a product and pay for it on a later date, rather than at the moment of purchase, when you may not have the required money available. This feature makes them quite handy with bills accumulating and waiting your urgent attention.

2. They eliminate the need to carry large sums of cash with you. It is much easier to report a stolen credit card and freeze your account.

3. Credit cards are a much more preferred means of payment than personal checks. Even if some institutions are unwilling to accept a personal check, they will most certainly take a credit card. Besides, travelers to Europe, Canada, United States will discover that cheques are not among the popular methods of payment. Unlike them, credit cards are widely accepted.

4. You will profit from the best rates of exchange when you visit a foreign country and make payments with your credit card. Some credit card companies may impose a surcharge on overseas payments; therefore, before you go abroad, consult your card issuer on its non-domestic payment policy.

5. If you move to a new town, a credit card will allow you to cover your initial expenses before you establish yourself as a good payer.

6. You can avoid paying for a purchased product for which you have discovered that it malfunctions or doesn’t live up to its advisement.

7. Credit cards make for neater substantiation of your expenses when it comes to paying your taxes.

8. When payments are made with a credit card, bookkeeping is much simpler and less time-consuming.

Credit Card Disadvantages

1. Credit card swindles are not infrequent. The most typical scenario is that of a card holder revealing their card PIN to another party (a salesperson, a financial institution clerk, or some other individual). Other credit card related crimes include identity theft and credit card fraud.

2. Credit card companies charge a fee for the issue and maintenance of a credit card. Moreover, they charge interest on every purchase made with the card, which means that paying with a credit card is more expensive than paying in cash. Some credit cards come with excessive interest, especially those that are intended for borrowers with low credit score.

3. Every credit card has a limit on how much money can be withdrawn from it for a specified period of time. Unaware of the exact amount of this credit limit, many customers draft over it and incur huge interest rates as a consequence. It is best to ask the card issuer about the credit card limit and the amount of interest rate in case of overdraft.

4. Some holders fall into the habit of using their cards to increase their present income. This practice is particularly dangerous because unforeseen future circumstances (unemployment, serious and prolonged illness, retirement, or similar unfavorable condition) may prevent them from paying off their debt and cause them to lose their property. In the same token, it is unwise to use multiple credit cards simultaneously.

5. Using funds from a credit card account is more expensive than taking a loan from a credit union (obtaining a loan, however, is much more complicated).