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June 27, 2015
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June 27, 2015
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Credit card – Advantages and Disadvantages

A credit card is not the same as a debit card. Under credit card, every time you purchase or transfer the balance from other card, you are actually borrowing the money.

Credit cards are creating huge issues in the lives of most of the people. But, at the same time, it is also proving beneficial for many.

A proper usage of the credit card can generate a lot of advantages for the customers. But, using a credit card unwisely can end you up in between a lot of troubles.

Let’s take a look at the advantages and disadvantages of credit cards.


1. Convenient – Credit cards can save your time as you do not have to go in search of an ATM. You can travel safely as you do not have to worry about keeping the cash in hand. Credit cards are useful in case of an emergency when you lack ready cash.

2. Building positive credit – Disciplined use of credit cards can help you to establish credit for the first time or help you to rebuild the credit if you have had problems in the past.

3. Achieving rewards – Depending on the credit card you have, you can earn a variety of rewards including cash back on everyday purchase, including gas and groceries etc. Many credit card companies offer incentive programs based on the amount of purchases that a customer makes.

4. Save money – When a customer consistently pays his bill on time, it helps to improve their credit score. With a higher credit score, one may qualify for low interest rates on mortgages, cars etc, which helps the customer save his/her money.


1. Blowing off the budget – The main disadvantage of a credit card is that they encourage people to spend more than what they have. Most of the credit cards do not require you to pay off the balance each month. The longer you wait, the more money you have to pay.

2. Credit card fraud – Like cash, credit cards are also stolen at times. They may be physically stolen and people can use them to clean up their own debts. Online frauds caused by hijacking the credit card details are not new anymore.

3. Hidden costs – The interest rate is the not the only cost of your credit card. A heavy financial charge is levied if the customer does not pay the monthly bill on time. The customer also has to pay a penalty if they exceed the time limit.


Credit cards may be a great tool and can make life easier, but if it is not used wisely, they can turn out to be a huge financial problem.

Use credit cards but remember to keep a track of all your purchases and try not to spend outside your budget.

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