The Pros and Cons of Credit Cards

There are many advantages and disadvantages to using credit cards. Understanding these pros and cons is very important. Otherwise, credit cards can do as much harm as good. Below are some pros and cons of credit cards.


Pros

You always have money with you . Most places accept major credit cards. That means you don't need to have cash with you all the time. You always have a source of payment.

Credit card companies can protect you . Some of these credit card companies offer services such as extended warranties, insurance, price protection, etc. Just remember to check if these services are free or if they are offered at an additional cost. Sometimes you are protected in other ways. Several years ago, my credit card company called me because they noticed some unusual purchases on my credit card. They analyzed my buying patterns and determined that the purchases were out of the ordinary. It turns out that someone had stolen my credit card number and made illegal purchases on my card. That was surprising to me because I still had my credit card in my possession. My credit card company removed the charges and issued me a new credit card. That was real protection. I have been with this credit card company ever since.

Make secure online purchases . Many people are reluctant to make purchases online. Some credit card companies offer one-time use credit cards. These cards offer some piece of mind when buying online. For example, my credit card company offers a free one-time use card. It is just like my original card, but it has a unique number. It can only be used once and it expires in one month. Any purchases made on this card appear on my usual credit card bill. This one-time use card is helpful because my real credit card number is never revealed online. Also, the card expires quickly.

Reward yourself . Many credit card companies offer rewards programs and incentives. The more you buy, the more you are rewarded. I treat myself to free gift cards with my rewards points.

Build good credit . It is important to build good credit. With credit cards, you can build good credit by simply making small purchases and paying them on time. This is a way to show a proven track record of making payments.

Cons

It's too easy to buy things . Credit cards make it too easy to make purchases. You may not realize how much you have spent until the end of the month when you get your bill. This is why credit cards can be dangerous. You could be digging yourself into a deep hole.

Be wary of the minimum payment . You might think paying the minimum on your credit card bill is a benefit. It's not. If your interest rates are high and your bill is big enough, the minimum payment may not be enough. In other words, your bill will continue to grow each month and you will never pay it off buy just paying the minimum.

Credit cards are not always accepted . Most places accepted major credit cards, but not all of them. There are still some cash-only establishments out there. Also, not all credit cards are accepted. So be sure to bring a couple of different ones with you. Call the establishment ahead of time to make sure your cards are accepted.

Some merchants charge more for credit cards . Some companies will charge you a higher price for using a credit card. For example, many gas stations have a significantly higher price for credit card users.

Credit cards can be stolen . If cash is stolen, you lose that amount of cash. But if your credit card is stolen, you could lose much more. You also have the hassle of canceling your credit cards. Be careful where you keep your credit cards.

There are many benefits and disadvantages to using credit cards. If you can minimize the disadvantages, credit cards will make your life much easier. Thanks for reading.

 

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