Credit Card–The Pros and Cons

Credit cards have been a part of our modern culture. The purchasing power it gives the cardholder is substantial and is indeed of good value.

Credit card application is easy and this gives its holder the power to do quite a number of purchases without having disposable cash. Like other things, there are a lot of advantages and disadvantages of having a credit card. Having a basic knowledge on these things might help you while you’re planning to apply for a credit card.

There are a lot of things which give credit cards its popular stature today. Its most attractive feature is the ease of purchase and the increase in purchasing power.

Another great advantage of having a credit card is that some companies don’t accept cash in their online transactions – hotels, airlines, car rental agencies and some other online shops require you to have a credit card instead to process your payments.

In times of emergency, credit cards offer you an irreplaceable source of money. This could fill in if you’re in a situation wherein you really need money. Meanwhile, some credit card companies also offer rewards and large discounts for their long time card holders. They may come similar to the concept of airline miles or travel discounts.

Another important feature of having a credit card is the protection of your purchases. They give you additional protection from defective, stolen or lost products that you may have recently purchased. If you’ve lost your original receipt, your credit card statement can prove to be a valuable resource since it can vouch your purchase. Over time, you will be able to build a good credit line record if you pay your credit dues on time. This credit line can later be used during loan application, rental application or in some cases, job applications too.

Credit cards also have their own share of disadvantages. The most common of such is that it encourages the holder to spend a lot. If you’re not careful on your credit card expenditure, you can end up overspending and getting to your credit limit – which means you will owe your credit company a large amount of money.

Credit cards interest rates are high, and their penalt interest rates are higher if you’re not able to pay your bill on time.

Another thing you have to look out for is that if you lose your card, it is imperative that you report this to the credit card company as soon as possible to avoid fraudulent use of your card.

Having a credit card certainly is certainly an advantage for you if you know how to control your expenditure. However, credit cards can be costly if you do not control your spending.

The only thing you have to remember when using a credit card is to set limits and be a responsible cardholder. Control your expenditure, pay your credit card bill on time and you won’t have any problem.