The drawbacks of having credit cards

Advertising Disclosure

Credit-Land.com is an independent, advertising-supported web site. Credit-Land.com receives compensation from many credit card issuers whose offers appear on our site. Compensation from our advertising partners impacts how and where their products appear on our site, including, for example, the order in which they may appear within review lists. Credit-Land.com has not reviewed all available credit card offers in the marketplace.

Credit Card Applications » Research » Guides » Cardholder Benefits » The drawbacks of having credit cards

The drawbacks of having credit cards

Add to Favorites:

The world today has become so dependent on credit cards; they are not willing to see the downside before signing up for them. Overlooking the drawbacks of having a credit card is one of the biggest mistakes a person can do. Understanding the pitfalls will help you be prepared and take preventing action so you don't fall prey to debts. Any person signing up for credit cards should have a thorough understanding of the pros and cons. Most of them are aware of the benefits; let us take a look at the drawbacks that need to be considered.

Drawback #1: Credit card debts

There can be nothing more stressful than having huge credit card debts that you cannot afford to repay. People with credit cards tend to go overboard and spend the money without second thought. They use these credit cards to make all their purchases, important or unimportant. This uninhibited spending is what lands them in trouble. By the time they realize their folly, it is often too late to make amends. They have no choice but to consider options that can help them clear off their debts.

Drawback #2: Tarnished credit history

Though using a credit card wisely can help you build a good credit history, using it without giving it a thought will result in tarnishing your credit report. Once the credit score gets pulled down or your credit report gets tarnished, obtaining any type of loan or credit card will become a concern. More often than not, the chances of rejection are high, thus putting your financial health in jeopardy.

Drawback #3: High interest rate

Credit card lenders make most of their money from the interest generated by clients using the credit card. Now that lenders understand how dependent people are on credit cards, they have significantly increased interest rates. This can burn a hole in the cardholder's pocket. In certain cases, the interest rate can go up to 30% a year! It is important to compare credit cards and opt for the one that offers favorable interest rates.

Drawback #4: Various fees

It is not just the interest rate on the credit card that increases your debts; there are also fees associated with the card which contribute to the debt. The most common fees on credit cards are the annual fees and late payment charges. However, there are banks that include many other hidden charges that need to be understood before signing up for them.

All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products’ Terms & Conditions on the issuing banks' websites.
Add to Favorites:
Get the latest news, articles and expert advice delivered to your inbox. It's FREE.

Related Research:

How to Subdue Wedding Expenses and Earn up to $1,000 for Honeymoon

How to Subdue Wedding Expenses and Earn up to $1,000 for Honeymoon

Posted: June 21, 2017

Whether you are married or not, we all agree that marriage is incredibly important for a person. It signifies the beginning of two people as a team, as a family, of a long commitment. It is a newly born union and the sign of your choice, ... Continue reading
How to Save Money. Best Credit Card Deals and Tips.

How to Save Money. Best Credit Card Deals and Tips.

Posted: June 20, 2017

We all've been through or may find ourselves in such an emergency when money is needed immediately. Lucky you are if you have savings for unexpected expenses. If not, it's never too late to start saving money. There are different ways to ... Continue reading
Cashback Match Lets You Double Your Discover Rewards

Cashback Match Lets You Double Your Discover Rewards

Posted: June 7, 2017

Discover has always been a leader in the cashback rewards game; with their generous 5% cash back in rotating categories offer, you can earn up to $75 in cashback rewards each quarter. But their latest card takes credit card cash back ... Continue reading