Having the money spending power is always enjoyable. Credit cards give that power and is a must have in today's credit driven economy. It gives the convenience of not carrying cash and checkbook to every place. It also has better security than carrying around checkbooks and money, which makes it desirable. If used well, it helps manage the money better, and helps deal with financial emergencies. Owning a credit card has its own advantages and disadvantages.
Advantages of using a credit card:
- Credit cards are the best way to build a good credit history. Using the credit card wisely and paying all the bills on time and in full helps get a good credit score and good credit history.
- Since credit cards are very widely accepted, it can be used anywhere and anytime. It is a safer option to carry instead of checks and cash, and can be secured with pin numbers and passwords.
- If credit cards are stolen, it can be reported to credit union and the card will instantaneously be cancelled. This safeguards the money and decreases the risk of thefts.
- Credit cards can be used to withdraw cash too, so it can really help deal with financial emergencies.
- It is a better option when on travel, because of its acceptance rate in any part of the world. It also can be used to obtain the local currency from the ATMs without any hassle.
- Credit cards offer good reward programs for customers using them. Free air miles, free hotel stays, cash back rewards, departmental store discounts, and gas rewards are some of the benefits of using a credit cards. Customers who use their cards regularly and have a clean record of paying bills on time can make a lot of profit using these reward schemes.
Disadvantages of using credit cards:
- Credit cards charge exorbitant interest rates and if any bill is not paid in full, or missed or even delayed in payment, it can snowball into huge outstanding balance.
- If the user does not understand the credit system, then it is easy to accumulate debts.
- Credit card companies charge a variety of fees and service charges, if the card has to be used at ATMs, or there is a delay in bill payment or any other small thing.
- Also, a good credit card with reward schemes may cost an annual fee, which is like paying for the rewards earned.
