5 Pros and 5 Cons for Credit Cards and How it Could Affect Your Personal Finances

Pros

1. Convenience and Security
Credit Cards offer an added security over carrying cash. They allow you to leave your cash in your bank account instead of carrying around cash. This helps you not be a target of thieves. It is also much more convenient to carry a credit card to buy a bedroom set than to carry around large quantities of cash in your pocket. Your purchases are documented and you can dispute any charges with merchants if charges you do not recognize show up on your bill.

2. Online Shopping
Shopping online would be impossible without using a credit card. They are able to verify your age using credit cards as well. Some important free sites require a credit card to make sure they can trust whom they are allowing to login to their website.

3. Same as Cash
Stores offer you the chance to buy large purchases same as cash with credit cards. This way you can get an item before paying the full amount for it. You have a grace period to pay the money without any charged interest.

4. Reward Points
Many credit card will give you reward points toward items you can purchase. You can get airline miles with some credit card reward plans. You can get coupons for dollars off your next purchase as well.

5. Discounts
Stores will give you items to get a credit card. They will sometimes give you a percentage off to buy items from their store. You become an exclusive member to get savings and discounts using their stores credit cards.

Cons

1. Late Payments
Do not be late with your payments on your credit card. They raise your interest if you are late on a payment. You can get a penalty for late payment. Your personal finances can be hurt on your credit score as well.

2. Hidden Fees
Some cards have start up fees or annual fees. Make sure you read all the fine print so you know the rules you will have to live by. Some even have a processing fee attached to them. The free coffee mug or shirt would be splendid but the $50.00 paperwork fee is not.

3. Over-Spending
Spending more than you should is easy with a credit card. It is easy not to think about your personal finances. You do not see the cash leaving your hand so it is easy to be detached from the money you spend. The credit card companies know the psychology behind this and use it to their advantage.

4. Same as Cash
Yes, this belongs in both the pros and the cons. This is a good thing but if you get to many “Same as Cash” deals and cannot pay them off in time. All the interest that you would have paid becomes part of your bill. Sometimes that can put you over the limit and you can get fines for being over the limit as well.

5. Debt
Credit Cards are bad for your personal finances. The debt you incur with credit cards builds up and is a problem. Give me a dollar and a quarter and I will give you a dollar all day long. This is what you are doing with credit cards.

Conclusion
Consumer credit is on the incline again. We all are going back out and spending more than we earn. Make a difference and use your credit cards wisely. Do not use your credit card as a way to get something you cannot afford. If you cannot afford to pay cash for it then do not use a credit card. When times get bad you will be in a better position than those who have spent more than they can afford. Good times and bad times will come so I say we should all be prepared.