The 21st century has brought numerous technological wonders with it such as tablets, smartphones, and online shopping. Among the array of machines and high-speed internet connections, there is one marvel that often gets ignored – credit cards.
A blessing and a curse at the same time, these compact cards fit right into the palm of your hand. They enable you to acquire credit on your purchases i.e. if you have one such card, you do not have to pay immediately for your purchases. As superb as that sounds, it does not eliminate the fact that there are certain drawbacks associated with using and relying on a piece of plastic.
Following are some advantages and disadvantages of credit cards. They ought to be kept in mind and evaluated carefully before an individual embarks on their credit journey and activates a card.
Easy to use
The biggest benefit of having a credit card is convenience. You do not have to worry about running out of cash or looking for the nearest ATM. Just swipe and pay right away!
Keep track of expenses
When you’re using a credit card, a statement arrives at the end of every month which shows where and when the card was swiped and the amount that is due. It can be used to manage your outlays. Also, some companies provide statements at the end of the year as well, which can come in handy for tax purposes.
Swift ways of borrowing
Instead of having to wait for a friend/family member to help you out financially, credit cards act as an immediate financing method which enables users to pay for their purchases with ease.
In case a purchase goes wrong, credit card users can rely on the company to settle their problems. They can also always claim money back from the card provider in case the product is broken.
Credit cards are one of the leading causes of piling on debt. Often users tend to get caught up in a spending spree and get negligent when it comes to paying off the balance. It results in an increment in the minimum monthly amount to be paid. Soon, interest payments begin to pile up as well. Once stuck in the debt trap, it’s hard to come out of it unscathed!
Possessing a credit card requires you to be responsible. It means saving all receipts and tallying them against the month-end statements. In this way, using a credit card can be cumbersome.
Better saving options available
Several cards charge users higher interest rates and annual fees, which eventually wipes away any savings associated with the use of these plastic cards. In fact, many times, users could save a lot more if they just use cash.
Often many card companies lure in customers with low interest rates. However, these only last for a limited period after which the amount of interest charged can soar high and push the individual towards a tight financial spot.