What are the advantages and disadvantages of credit cards?

Credit cards have become an indispensable part of our lives. Thanks to the secure payment options and the discount offer to flood the markets, every consumer wants to add a shiny new card to his wallet. Credit cards do run the risk of being unnecessarily expensive. However, if used wisely and efficiently they can be a significant financial tool too. If you re one among them and are thinking of going ahead and getting a credit card of yourself, do have a look at this article before taking the big leap. So, here are some advantages and disadvantages of credit cards those help you in deciding; if you do or do not want use credit cards.

Advantages of Credit Cards

1. Convenience

Credit cards can make your shopping experience a lot more worthwhile and convenient. You don’t need to have a truckload of money every time you go out for shopping. You need to swipe your card, and you can purchase whatever you want to. You no longer need to fish inside your pockets to check whether you have the exact amount of money required to buy something.

2. Purchase and sell online

Credit cards are an essential part of the world wide web as you can make an online purchase only through the use of credit cards. The other digital modes of payment are not available at times. Moreover, real money is useless in the online world altogether. In such a case, if you are a fan of online shopping, owning a credit card is imperative.

3. Earn Rewards or Cash backs

Every company aims to make its credit cards more feasible and attractive to the consumers. In such a scenario to stand a chance in the competitive market, every time you use a credit card some points add up to your card. Moreover, if you are a regular user you can quickly earn rewards and cash books every time you book an airline ticket, book a hotel online etc. The points that you accumulate through your purchases at the end can be used to but something else.

4. Free Credit for a Short Time Span

In the short time span between billing and paying your bill, you can enjoy interest-free purchases. This period is a massive advantage of owning a credit card.

5. Ensure your Safety

There is always a lurking fear of theft or some unwelcome circumstance when you carry thousands of rupees for a purchase. Though a credit card, you can bid goodbye to these security woes. Be it a Rs50 bill or Rs50,000, the same old credit card works well in every circumstance and eliminates the need for cautiously carrying a ton of cash altogether.

6. Savior in Contingencies

Take an emergency, for instance, a sudden medical need, you cannot carry thousands of rupees with you every time you go out because of an irrational fear of mishap. Credit cards are extremely useful in making immediate payments in such situations and can act as a saviour in contingencies.

7. No Need of Conversion

If you are a frequent traveler and are tired of getting your currency converted every time, you should probably switch to credit cards because not only will they earn you massive discount on your essential bookings like airline tickets or hotels but will also make it easier for you to carry on transactions in the foreign country as there will be no need of conversions. This facility comes at a little cost. However, given the convenience it provides to the user, it is mostly worth it.

8. 24*7 Protection

If you do end up losing your credit card in mysterious circumstances or become a victim of a theft, you can easily access the 24*7 helpline offered with credit cards. You can get your card blocked in no time and thus dodge the evil intentions of the malefactors in the society.

 

Disadvantages of Credit Cards

1) Sky High-Interest Rates

Of all the types of loans and mortgages available in the market, credit cards are infamous for being associated with the highest rates of interest. If you are not punctual by nature and tend to delay on your credit card payments, they can turn out to be expensive for you because of the hefty fines.

2) Debt Traps

Debt Traps are the worst case scenario when it comes to discussing the cons of getting a credit card. If you lack self-control and tend to splurge when you are out shopping, you should avoid switching over to credit cards. You can end up wrecking up your debt and thus playing havoc in your life as you don’t need to apply for a loan every time you make a purchase. If you cannot earn enough to pay the monthly payments on your credit cards, you can run the risk of being burdened with massive debts along with multiple credit cards.

3) Complex Fines and Fees

The fees and fines associated with a credit card are a bit difficult to comprehend for a layperson. They have a host of terms and conditions. Not only do they have a fine for late payments, but they also charge interests. In such a case, a person with relatively less knowledge is stuck in a debt trap and has no way out. Burdened with a dozen of fees like fees for withdrawing money from your credit card, such a person can become hopeless and confused to a great extent.

4) Promotes Spending over Saving

Credit cards can be called a necessary evil. They have this culture of supporting spending vast amounts without giving much thought not the savings at a person’s disposal. This practice can be disastrous in the long term. By promoting a culture of instant gratification, a credit card can eventually lead a person to his doom.

5) Identity Theft

Credit cards also run the considerable security risk of identity theft. Every year people are long billions and billions to fraudsters who manage to compromise the credit card numbers of consumers. Online crime thrives on this theft, and it is much easier to steal a person’s credit card information than it is to steal physical cash.