As a somewhat familiar saying goes, “you can’t live with them and you can’t live without them”. In this case I’m referring to credit cards. What did we ever do before we had credit cards? The answer is simple, we paid with cash. In today’s modern world that option isn’t always possible, though. In most instances you can’t get into a hotel without a credit card. It’s the first thing the receptionist asks for when you’re checking into a hotel. We need and use those little plastic cards almost on a daily basis for any number of things.
There are a number of advantages as well as disadvantages when using that almost indispensable form of payment, the credit card. Here is a list of some of both the pros and cons of credit cards.
Pros of Credit Card Use:
1. Convenience: This is probably one of the biggest advantages of using credit cards. Instead of having to carry around a lot of cash with you, you can just carry a credit card. If you shop and find something you probably didn’t expect to buy, no need to worry, you have your credit card with use. Credit cards are also great in case of some unforeseen emergency that might arise.
2. Building Credit: Credit cards are of the best things around to help you build up your credit history. Your credit history is one of the first things that’s looked at when you try to obtain a loan, rent or lease a home or apartment etc. A good credit history is a very essential tool that goes with you everywhere throughout your lifetime, and your credit card is a good place to start building that history.
3. Rewards: A number of credit card companies give very good rewards for using their plastic. Credit card rewards include everything from cash-back, travel rewards, various types of upgrades, just to name a few of the perks that credit companies entice you with to use their credit cards.
4. Security: Security is also a big factor for credit card users. You don’t need carry a lot of cash around with you and take a chance that it could be lost or stolen, when you use credit cards. It’s also a good identity tool in many cases.
Cons of Credit Card Use:
1. Overspending: I have been, and still am at times, guilty of this trait. You need to pace yourself when using credit cards so you don’t overspend. It’s very easy to do this and then when that credit bill arrives in the mail, reality hits. So be very aware of the fact that eventually you will have to pay for that little red purse that was on sale at the mall and you thought you couldn’t live without it, so you purchased it with your credit card.
2. Cost of using credit: Using credit cards is a debt that has to be paid off eventually. There can be some very high interest fees if you don’t pay your credit card statement in full each month. Also be aware of annual fees and other hidden charges and penalties that many credit card companies may charge.
3. Identity theft: Always be aware of your surroundings when using your credit cards and never give your credit card number to anyone that you don’t consider trustworthy. Some of the biggest credit card scams occur over the phone as well as on the Internet.
To summarize, make sure the pros of using your credit cards will outweigh the cons. If you use this theory, you’re on the right road and probably won’t have to deal with any number of financial issues that could arise from unwise credit card use.