Some of us find credit cards useful, while others avoid it at any cost. It is the actual cost that many of us worry about. A credit card unlike a debit card is used as a mean to withdraw or make purchases on a credit basis. Similar to a debit card, it is issued by major credit companies in association with banks, financial institutions, retail stores, and businesses. A credit card holder has instant spending power within a limit set by the bank. It also provides a number of services.
As there are many advantages, there are many disadvantages to getting a credit card. To consumers who settle their balance on time, credit cards can be convenient. They can be indispensable to travelers as they are quite useful to purchase airplane tickets and to make hotel reservations. Credit cards can prove beneficial as a financial back up in time of crisis or in case of an emergency. They are quite handy in unaccounted for situations, such as healthcare costs or in case of a job loss, etc.
They are also a payment means to online and order by mail purchases. Some cards offer cash back, while others offer store discounts, miles, and rewards. Most reward system accumulates points that are swapped for gifts. It is also important to note that if handled wisely, credit cards can help build your credit history. They are also useful to handle and monitor your expenses and financial activities.
It is easy to get lured by the easy access credit cards provide its holder. The ready accessibility to funds and the purchasing power can be the pitfall of some if used unwisely. Some consumers consider credit cards as an extra income rather than what they are, an additional debt. Through a false sense of security, they feel compelled to spend more than they actually have. Another hazard is rolling over a balance for months, which can ruin your credit history score. Moreover, acquiring a large amount of credit card debt can work to your disadvantage. It will undermine your chances for getting a loan in the future. It is also essential to take into considerations the late fees and interest you can accumulate in case of payment default as well as the increase in the risk of credit cards fraud.
Credit cards are a commitment and should not be taking lightly. In order to not get carried away and fall into debt, avoid overspending, keep track of your purchases, review your monthly statements and pay the pending balance religiously. Furthermore, in case of loss or stolen credit card, inform your bank or credit card company immediately.