The good and bad sides of credit
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Credit Cards are one of the most convenient ways to make payments and to maintain control of the finances, but there are many advantages and disadvantages of using credit cards that should be taken into account.
Should you use credit cards? There are definitely good and bad credit cards. While credit cards are a useful tool that can be used with convenience, it is important to know how to use a credit card wisely, maintaining a good history with the credit card company. Unfortunately, credit cards do not come with instruction manuals and many people find themselves facing credit card debt because of this.
Return
While using a credit card you can take advantage of rewards programs such as rewards points, cash back or airline travel miles that can help you to make the most of the cash that you are spending. The card holder receives a certain amount of rewards for the money that is spent on the card, usually per dollar.
Credit cards allow you to make purchases through a variety of mediums, including the internet and over the phone, even buying something from an ad that you saw on television. There are not many other payment methods that are as flexible.
If credit card purchases are repaid within the grace period of a credit card (which often lasts twenty one to twenty eight days) then the purchase can be paid without accumulating any interest on the credit card.
Credit cards can allow you to budget. For example, choose to spend no more than one thousand dollars per month on your card and once you have reached the spending limit stop spending.
Disadvantages
Credit card payments can easily become crushing when you are carrying a balance and are close to the credit limit. If you are unable to control your spending then credit cards may not be the best payment option for you.
Credit cards are one of the most expensive financial services and can come with annual fees, high interest rates and over-limit and missed payment fees. These fees are charged to the balance of the credit card and can cause the balance of the credit card to quickly increase.
Credit cards can lead to spending without thinking and therefore can lead to debt as you do not often think about what is being placed on the credit card until you have to pay the credit card bill at the end of each month.
Credit cards allow people to live beyond their means and accumulate debt, as they are often used to cover expenses that the consumer is unable to afford. More than 80% of households are living outside of their means through the use of credit cards. This is a hard habit to break once you become accustomed to living a certain lifestyle on credit.
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