The drawbacks of having credit cards

ADVERTISING DISCLOSURE

ADVERTISING DISCLOSURE:
Credit-Land.com is an independent, advertising-supported web site. Credit-Land.com receives compensation from most 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

The content is accurate at the time of publication and is subject to change.

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.

Disclaimer: This editorial content is not provided or commissioned by the credit card issuer(s). Opinions expressed here are the author's alone, not those of the credit card issuer(s), and have not been reviewed, approved or otherwise endorsed by the credit card issuer(s). Reasonable efforts are made to present accurate information, however all information is presented without warranty. Consult a card's issuing bank for the terms & conditions.
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:

Top 5 Cards for Travel from Our Partners: Summer 2018 – Expert’s Choice

Top 5 Cards for Travel from Our Partners: Summer 2018 – Expert’s Choice

Posted: February 12, 2018

The sun shines more and more each day, flowers are in bloom and you already feel how hot it is getting - summer is here. Summer holidays are almost here, and you are in need of dire preparation. You can lift in spirits and let CreditLand ... Continue reading
Cash Back or Travel Rewards? Here’s How to Decide On The Right Card

Cash Back or Travel Rewards? Here’s How to Decide On The Right Card

Posted: February 10, 2018

If you're trying to find the perfect rewards credit card, you might feel like you're drowning in options. There are just so many out there, and many of them look similar. This can make it tough to decide on a card. One thing people often ... Continue reading
Price Protection: Credit Cards That Will Refund a Price Drop

Price Protection: Credit Cards That Will Refund a Price Drop

Posted: February 8, 2018

Those who often find themselves buying stuff and then discovering that they could pay less for the same item they've just bought, will appreciate this credit card benefit – price protection. This is the least known and the most neglected ... Continue reading
You've successfully subscribed!

Please specify the following:All these fields are optional

Your Credit History
Themes you are interested in:

By providing this information you help us make our news letters more useful and informative. Thank you!