Advantages and Disadvantages of Using Credit Cards

March 27, 2010 by Jay
Filed under Credit Cards

Credit cards have become a major element of every working individual’s life. It is even used by children and teenagers as well because their parents allow them to become supplementary or extended credit card holders. However, it is advisable to often remind these young people on how to be responsible in using credit cards because the use of these cards may have its advantages and disadvantages. Let us learn more about on how to become responsible users of credit cards as we will know its different advantages and disadvantages in this article.

Credit cards have plenty of advantages. One of its greatest advantages is the permission it extends to people in doing huge purchases such as expensive cars, jewelries, book, shopping, and even school tuition fees. The cards also help in paying emergency bills such as hospital or medical bills resulting from accidents. On the contrary, credit cards also have its disadvantages. If the credit card holder cannot control the temptation and gratification of using credit cards, he or she is likely to do continuous purchases, which eventually will turn into debts. Once the purchases are huge, the credit card holder may not be able to pay back the amount of money he spent, including the charges or fees of using the cards. Because of this, an individual may experience personal finance problems.

Although credit card is a great idea for many people, it still gets to ruin many people’s financial status. One reason for this is that people do not use the cards in the right manner. They often spend the entire balance of their credit cards as one time and then end up paying off the interests incurred. With this method, people barely made a dent on the overall principal balance of the credit card. This is not an effective way to manage money.

Aside from the great convenience that credit cards give, the cards also provide safety in dealing with actual cash. With credit cards, a person does not need to bring plenty of cash for his or her purchases. In some sense, credit cards are also very useful to people since most credit card companies offer protection act to consumers. The act covers money back guarantee to consumers once fraudulent purchases are made. Another advantage of using credit cards is that it entitles consumers for incentive benefits such as shopping points or air miles. In some cases, credit cards would often take a percentage of your purchases and give it to charities.

Having too many credit cards is not advisable. Aside from the temptation it brings, the great chances of being stolen are there. Keep in mind that your credit cards can also be used by other people when stolen. Other people would just have to forge your signature when making the purchases on your credit cards. As this happens, you will end up in mountain of debts that you have not made yourself. In addition, maintaining too many credit cards will not be easy as you will not be able to maintain the balances effectively as well as payments. On the contrary, credit cards can be your best buddy as long as you are using it the right way and you pay cash payments on time.