A Summarization of the Advantages and Disadvantages of Using Credit Cards

Sometimes it’s important to look at the things that we may take for granted but are nevertheless very important. Credit cards are a financial instrument that play a major role in the lives of millions of American consumers and businesses. It is important to understand the advantages and disadvantages that using credit cards.

Advantages of using credit cards include:

  • They are a safe alternative to cash. You don’t need to worry about losing your wallet or having it stolen and being out money with credit cards. You simply report your cards missing and they will be canceled while the credit card company takes care of any charges that were made on it unlawfully.
  • The opportunity to build a solid credit history. Credit cards can help you build a good credit rating that will serve you well throughout your life. A strong credit history will allow you to get the lowest interest rates on things such as mortgages and auto loans along with many other benefits.
  • Credit cards are indispensable in case of emergency. If you for instance have unexpected bills pop up such as medical care or car repairs and are short on cash, the value of using a credit card to cover the cost of the goods and services is self-evident.
  • Credit cards afford you time to pay for the purchases you make when you are low on cash. It is always nice to have extra time to pay for the things that we buy.

Those are the advantages of having a credit card. They are quite frankly, all excellent reasons to have a card at your disposal. Credit cards are, for all intents and purposes, a line of credit that we can access at our convenience. There are however, a downside to using credit cards and we will point out these disadvantages here.

Disadvantages of using credit cards include:

  • Using credit cards can be very tempting. Nothing is easier than pulling out your special piece of plastic and using it on just about anything you desire. The convenience factor of credit cards cannot be overstated and in many cases it is what gets people in trouble by creating large debt.
  • Carrying a balance can become quite expensive for the cardholder. Good intentions are wonderful and whenever you buy something you may fully intend to pay for it when the bill arrives but in the real world it doesn’t always work out that way. That is when revolving credit balances start to become expensive for the cardholder.
  • Getting into debt is very easy to do with credit cards. This third point is a direct offshoot of the previous two. There are millions of Americans that are so deeply in debt with their credit cards that they are either defaulting on making payments or declaring bankruptcy.

Credit cards can be a wonderful instrument to have but they are also all too easy to abuse. Before you apply for a credit card you must first ask yourself, do the advantages outweigh the disadvantages. Making an honest assessment is crucial to building a strong financial foundation.

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