Advantages and Disavantages of Having a Credit Card
- Credit cards have advantages and disadvantages.Credit card globe image by patrimonio designs from Fotolia.com
Just as the name implies, a credit card is a card that allows the holder to purchase goods and services with the understanding that the holder will pay in full later. The holder of the card gets a line of credit from the issuer of the card, mainly credit unions or local banks, which the holder can borrow from to make payments to merchants or as a cash advance. Credit cards have advantages and disadvantages. - Credit cards are convenient.credit card image by jimcox40 from Fotolia.com
There is no denying the fact that credit cards are much easier to carry than wads of cash. Credit cards make it very easy to pay for goods and services. Credit cards allow people to make large purchases, such as expensive furniture. They are very useful in emergencies or in such situations where the cardholder simply doesn't have the cash to take care of the emergency at that time. Such emergencies could be when a car breaks down suddenly and the cardholder needs to pay for a motel or for the payment of tickets for sudden trips. Most hotels, airlines, car rental agencies and some shops do not accept cash payments, so a credit card comes in very handy for paying for their services. Those who buy things online can also pay for them with credit cards. Credit cards offer the holders protection when something they buy is lost or stolen because the credit card statement can be used as evidence that such a purchase was actually made. Some credit cards offer benefits such as discounts from some stores and companies, travel or life insurance and even insurance on large purchases. Other benefits include free airline miles or travel discounts and cash back on purchases. - Credit cards help cardholders build good credit histories.credit card detail image by gajatz from Fotolia.com
Credit cards can help the cardholders build a good credit history. They can do this by paying their debt in full when due. It makes it much easier for them to apply for rental applications, loans and even some jobs. - Credit card companies charge high interest rates.Credit card image by amlet from Fotolia.com
The main drawback of credit cards is the fact that it can seem like bonus money to be spent at any given time instead of the loan, which it actually is. This leads to irresponsible spending on the part of the cardholders, who quickly realize the folly of their ways when the credit card bills start coming in. Credit card companies charge a high amount of interest on the balance which is not paid off at the end of each month. This is the main way in which they make money and a major reason why a lot of people are in debt. - Credit cards can be misplaced or stolen.Credit card gold image by patrimonio designs from Fotolia.com
Credit cards can be misplaced or stolen. Fraudsters can steal your credit card number from the Internet, a receipt or over the phone and use it to rack up debt in your name. When you report to the credit card company, you will not be charged for any of the purchases made or you might be charged a small fee such as $25 or $50 depending on the credit card company despite the fact that the thief may have charged thousands of dollars to your account.
