Learn the advantages and disadvantages of credit cards

 Some of the notable benefits of a credit card are building credit, getting cash back, or being protected from fraud. You can rest assured that you will not have to carry cash again. There are only advantages to using a credit card, no disadvantages; It would be foolish to think so. In this post you will learn more about the advantages and disadvantages of credit cards.

Credit card benefits

Let's first learn about the benefits of credit cards.

Creating a credit record

Proper use of a credit card creates a credit record. And credit card spending limits may depend on this credit record. If you have a good credit history, you will benefit from a variety of credit card based services. If you pay regular credit card bills and make good transactions, your credit score or reputation will increase. As a result, you can get the benefit of the next card or loan.

Rewards

You can get rewards for using credit cards in the form of cash back and points. Many credit card providers also offer sign up bonuses if they can meet certain goals within a specified time.

Security from fraud

Credit card companies provide adequate security for users' transactions. If for some reason you see an unwanted transaction on your card, you can call the credit card provider immediately and ask for help. If you can't find or lose the card again, call the credit card provider and you will be given a new card by blocking the card.

No need to carry cash

Using a credit card is much more convenient than using cash. Also, there is no problem in carrying a credit card as it takes up less space in the wallet. Credit cards are now a standard payment method in almost every country in the world. Credit cards can be easily carried in one's pocket while traveling. If you lose this card again, you can get a new card in a short time.

Keep track of costs

The issuing company tracks and records all credit card transactions. Your transaction history, i.e. merchant name, amount of expenses, date, etc., is stored. With this information at hand, it is very easy to keep track of costs.

Parks

Most credit cards have Extensive Parks that offer benefits such as Fraud Protection, Price Protection and Extended Warranty. Rental car insurance, roadside assistance and various other credit card users get exclusive benefits.

Buying goods in installments and not incurring immediate cost

Products can be purchased in installments through credit cards. It is possible to improve the lifestyle by easily splitting large payments into small long term installments. Credit card bills, on the other hand, do not have to be paid immediately, so it is quite easy to arrange for an emergency.

Credit card problems

Credit cards are not just a combination of rewards or sign-up bonuses. It is a financial tool which, if not used seriously, leads to unnecessary fuss and fees. So it is important to know the disadvantages of credit cards. Let's take a look at the disadvantages of credit cards.

Excessive spending mentality

Credit card use can lead to high cost mentality. Since the main purpose of a credit card is to provide an out-of-pocket expense to your savings, not calculating the cost can lead to the habit of extra spending, which in many cases leads to loss.

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Excessive credit card costs can be overwhelming. Failure to keep a regular account of expenses can lead to shortages of money in a short period of time as well as accumulation of extra waste. So it is better to spend only the amount that can be returned. Remember, in the case of credit cards, you are using borrowed money. So if you don't use a credit card to keep an account, it won't take long for you to face the dilemma.

Fees and interest

Credit card fees and interest are two things that can increase without the user knowing. Interest rates, in particular, can rise to a level that is beyond the control of a credit card holder. 

In addition to interest, various credit card issuers charge fees for late payments, balance transfers, cash advances, foreign transactions, etc. Some issuers even charge an annual fee for card usage only.

The best way to avoid this type of interest and other fee related problem is to pay the rest of the money (minimum payment) every month. If that is not possible, it is best to pay the remaining amount as much as possible. However, it will increase your costs will not decrease.

Negative impact on credit score

Not knowing how to use a credit card properly can have a negative effect on your credit score. And if the credit score decreases, you may not get the mentioned special benefits, such as auto loan, car loan, etc.

Not paying bills on time, not paying bills at all or uncontrolled use of available credit limits can have a negative effect on credit score. The correct rules for using a credit card should be followed to keep the credit card score correct.

Like all things in life, credit cards have advantages and disadvantages. However, if you do not know how to use this plastic card properly, you can get into a lot of trouble. Therefore, in case of using a credit card, you should apply for a credit card only if you know well about the credit card.