Credit Cards: Pros and Cons: Nowadays, more and more people all over the world become owners of credit cards. The reasons for getting a credit card vary greatly. For instance, a person needs to purchase something expensive, but cannot afford it because his/her monthly income is not enough. Other people (especially students), aiming to get rid of financial dependence, go to the nearest bank office and get a card. Some people need credit cards urgently to settle their old debts. Anyway, getting a credit card must be a result of a wise and conscientious decision.
Credit Cards: Pros and Cons
According to their function and purpose, credit cards can be subdivided into several types: standard credit cards (balance transfer and low-interest credit cards), credit cards with reward programs, airline mile credit cards, credit-repair credit cards, and others. Acquiring one of them, a client should know about their general advantages and disadvantages, not to mention conditions: the sum, interest rate and terms of repayment. Being a credit card owner has both pros and cons.
Credit Cards Pros
Any cardholder may enjoy the convenience of a card. There is no need in using cash machines or holding some amount of money in the pocket. A person can receive cash comfortably and quickly. Revolving credit is the main peculiarity of credit cards. It means that a client can take any amount of money when it is needed, but it is important not to forget about the commitment fee, which must be paid every month. There are many incentive programs enabling card owners to have discounts, cash-backs, and other attractive services when making a purchase or traveling.
A credit card check is an evidence, which can help in regulating conflicts when a seller refuses to take back a product of poor quality. Thus, a cardholder can always be sure his consumer rights will be protected. When a person counts on further loans, he/she should keep in mind that wise and responsible use of the credit card helps build a positive credit score. Clients with a good credit history are especially preferable among lenders. Besides, a better credit score may assist in reducing interest rates on mortgages.
Credit Cards Cons
The first thing every potential cardholder must remember is that any credit card is a debt. In spite of its convenience and multifunction, it is still a debt. Another side of revolving credit is that clients can easily spend money and exceed their means. Making a purchase, a card owner will be obliged to pay much more if a monthly payment is missed. Moreover, getting the cash advance is accompanied by additional pay (2-7 percent).
Personal incomes often do not correspond to interest rates and annual fees. In addition, increasing balance leads to increasing of monthly commitment fee. As a result, a person is heavily in debts. Low-interest rates attract many people, but it is necessary to realize that such “beneficial” offers have a strict time limit. With the expiration of “attractive” rates, higher and less convenient conditions appear.
To conclude, being in debt is quite a personal option. A thorough calculation is advisable when taking a credit card. Before going to the bank, a person should think whether additional financing such as credit is necessary at all. The reliance on one’s own means and living within one’s personal income is sometimes more profitable and secure than a “bright” life with a deep hole of debts.
Read Also: How to Use Credit Cards Correctly?
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