If for any reason you are considering applying for a credit card, then this is the right article for you. There is a myriad of ways that this can help you out especially when it comes to managing your finances. However, if not managed properly, then it can turn into the worst decision you ever made. Thus, all the more reason to skim through the advantages and disadvantages of using credit cards.
Whatever the case, check out this list to help you make the right choice:
Merits
1. Safer Compared to Carrying Cash
Credit cards are, by far, much safer than carrying any amount of cash with you. For one, the chances of you getting back your lost or stolen cash are always close to zero. Whereas, with credit cards, it’s as easy as making one call to your bank and having your credit card canceled the moment you realize you have lost it.
Most financial institutions even have security processes that help protect your account in case they suspect fraudulent activity.
2. Credit Rating
Credit cards also play a critical role in determining where your credit rating goes. Having a good credit rating can also help you take advantage of getting the best loans and credit cards on the market. At this stage, you only need to use your credit card responsibly to improve your credit rating.
3. Convenience
Credit cards are mostly convenient especially as they help reduce the need to carry cash around. Not only that, but most retailers also accept credit cards. Plus, you also need one to make online purchases, easily make deposits, and automatic currency conversions.
4. Transactions are Easily Trackable
Credit cards also come with electronic record keeping features which enable you to track your spending or issues related to identity fraud easily.
5. Best for Emergencies
There are instances where cash may be the only solution for emergencies especially when you get hit with unexpected expenses. In such situations, credit cards tend to be the quickest, easiest solution.
Demerits
1. Interests and Fees
Credit cards can come packed with hidden fees, annual fees, balance transfer fees, and the likes. Ideally, using credit is like borrowing, and you are not borrowing for free. Thus, mismanaging your credit card can lead you down a deep hole of high balances or end up maxing out your card.
2. Overspending
In as much as credit cards can help make your life easier, they can also make your overspending easier. Credit cards are a way of spending cash that you don’t have yet. If you are not careful, there is the likelihood that you end up in unexpected debt.
3. Mounting Dept
There is also the likelihood that you carry your credit balances from month to month, which can easily rack up your interests and other related charges. Credit cards are gateways to additional debt that most people don’t know about yet.
4. Fraud
Credit cards also carry unique dangers that can be quite detrimental. Like anything else, they can be stolen or their numbers copied, which may lead to money being stolen or identity theft.
5. Limited Usage
There are situations where banks can also limit or restrict the manner in which you use your credit cards. You must, therefore, know all the limitations that can befall your card in certain situations.
The above contents prove that there will always be something to be said on both ends of using credit cards. They can either help or harm you. But it all depends on how you use them.