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

By
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.

Add to Favorites:
Get the latest news, articles and expert advice delivered to your inbox. It's FREE.

Related Research:

5 Reasons to Get the Capital One Venture Miles Rewards Card

By Herbert Moore, Posted: January 18, 2017

If you’re looking for a great travel rewards credit card—one that offers unlimited earning opportunities, flexible redemption, and lots of perks—look no further. This card from Capital One has you covered. Continue reading

Credit Card Tips For Holiday Shopping 2016

By Herbert Moore, Posted: November 23, 2016

November and December are the busiest months as gift shopping reaches its peak. People rush around looking for the best gifts and the best deals leaving a lot of money in the shops. Holiday season may force you to go over the household ... Continue reading

Credit Cards to Save More on Holiday Shopping

By Herbert Moore, Posted: November 22, 2016

Discounts and special offers are available all year round. Werther you are a bargain hunter or an impulse buyer, make sure you check online discounts and special offers. Also, if you are a cardholder, see if your credit card opens the door ... Continue reading