Credit cards are a way of llfe in this nation. Most of us can hardly imagine life without them. I am old enough to remember when they were limited to gas purchases and to retail stores like Sears or JC Penney. Mastercard and Visa revolutionized credit card use and American spending habits. As is true for many modern conveniences, credit cards can be our servants or they can become our masters(no pun intended). This article will examine some of the major pros and cons of these little pieces of plastic that we often love and somerimes loathe.
- Perhaps the major attraction, at least at first, of the credit card is its convenience. When I got my first all-purpose card, a BankAmericard, the forerunner of Visa, I couldn't believe just how convenient it was. No longer would I need separate cards for Sears, JC Penney, or for other local merchants. Moreover, it could be used anywhere in the country. If one uses just the one card, it can be very efficient, especilly If the balance is paid each month.
- Credit cards eliminate the need to carry large amounts of cash. I can remember my father cashing his paycheck each Friday at the bank and carrying cash in his wallet all week. My parents would pay for all bills and purchases with cash. This system quickly seemed antiquated to me, especially after the development of ATM and debit cards. Carrying large sums of cash increases your vulnerability to loss due to robbery or caelessness. Credit cards at least make you feel less vulnerable
- Credit cards can be useful when one may not have the cash or checking account balance to cover an emergency auto or home repair or medical bill until the money can be replaced.
This is not a bad thing to do if the balance is paid out promptly.
- Similarly, credit cards can be used to obtain sale items that we can't pay for now, but that we soon wiil need, such as tires, appliances, or computer accessories. By buying now while the item is on sale, we pay less than if we waited until we could pay cash. Again, the key is paying out the balance as soon as possible.
- Credit cards offer rewards and discounts. Visa users can redeem points for use at restaurants and retailers. Some retailers such as Kohl's, Macy's, and Sears offer discounts when items are purchased by use of their cards. If balances are paid promptly, significant savings can be earned.
- If one uses one card and pays the balance each month, the card can be very convenient. Unfortunately, many people have not one but several of these all-purpose cards as well as a few retail store cards. In this case,the convenience of one payment no longer exists. Moreover, unless all card balances are paid out, interest, sometimes over 20% must be paid.
- Not carrying cash can have it's downside. I find that when I go to the store with cash to spend, I am somehow more cognizant of what I am spending. The credit card makes it easy to make uneccessary purchases which can exceed your budget..
- Emergency expenditures or bargains purcahsed by credit cards easily can become long-term debts with consequent excessive interest charges.When you add interest payments, the purcahses are no longer bargains. Why pay 20% to save 10 %?
4.Credit cards often have hidden fees. If you read the fine print, some cards have annual fees in addition to the interest charges. Moreover, many have stiff penalties if the payment is even one day late.
5.Perhaps the most insidiuous and costly negative of using credit cards is the tendency of many to live beyond their means. I have seem couples with good incomes face bankruptcy because they continued to extend credit limits, activate new credit cards when credit was easy, and pay one card bill(not the balance)by using another card.
The Romans had a saying, caveat emptor, which means "Let the buyer beware." This is especially true if you use credit cards. When used wisely, they can be great. When used unwisely, dire consequences can ensue.Use them, but be wary.