Pros and Cons of Credit Cards
Credit cards have become popular all over the world for many reasons. But along with popularity, they have earned some notoriety too as credit cards are being blamed for many people’s financial woes. So, are credit cards a boon or bane? Read on to learn the pros and cons of using a credit card.
Pros of Credit Cards
You can use a credit card even for mundane tasks like to fill gas, pay for grocery, buy tickets for a ballgame etc. Now, you don’t have to carry wads of cash everywhere you go. This minimizes the risk of cash theft. Credit cards are a great boon especially for those who are on the move and travel a lot. Plus, most stores accept credit cards for almost any purchase.
If you got it, why not flaunt it? Being rich and famous means you get repeated offers from premier credit card companies to use one of their cards. If you flaunt a Diners or Amex card to pay your restaurant bills, it means you have arrived and how. Thus, credit cards have become a major status symbol with which you can impress your date.
Every time your card is swiped for a purchase, you get some reward points. Over time, these points add up and can finally fetch you a goody gift. So, you can shop till you drop and get rewarded for it too.
Build Your Credit Score
If you are responsible and pay your dues within the due date, you can boost your credit score. A good credit score will vouch for your accountability and dependability. This means you have an advantage if you apply for a mortgage or loan.
Cons of Using a Credit Card
Risk of Debt
Many people, especially greenhorn college students, splurge on their credit cards and run up huge debts. When the collector comes calling they realize their folly, but then it is too late. So, if you are an impulse spender, credit cards may not be for you.
Penalties on Late Payments
If you do not pay your dues within the stipulated date, you could be in big trouble. Many credit card companies charge penalties, exorbitant interest and late fees, which can wreck you financially. So, if you are a late kate who disregards due dates, credit cards are definitely not for you.
Most credit card companies literally beg you to use their card and offer freebies too when signing up. The bad news is they do not tell you about processing fees, start-up fees and other hidden charges. The annual fees for the card can cost a lot too.
Risk of Fraud
Credit card fraud is rampant in many countries and using it online invites risks too. Hackers can steal your credit card data and make fraudulent purchases, which can be a big hassle for you financially and emotionally. So, follow the security tips given by your credit card company to prevent credit card fraud.
We hope this article has convinced you that credit card is not a product to be trifled with. Opt for one only if you are sure you can use it responsibly and safely. When it comes to credit cards, always apply the maxim “Better safe than sorry”.