Understand both the disadvantages AND advantages of credit cards…
It can be tempting to be really impressed by the advantages of credit cards and jump in feet first BUT – there may be drawbacks too once you read the fine print!
Advantages of Credit Cards
If borrowing for a short period, they can be less cost effective – Personal loans can be expensive to borrow than if you borrowed the balance off a credit card. The interest is paid on the remaining debt only, not the whole loan.
Credit
Flexibility – You can pay small amounts each month or can pay up to the total balance. There are no redemption penalties – If you paid off a loan earlier than contracted, you would come across a redemption penalty.
Interest-Free Credit – Normally, up to 60 days interest free credit.
Telephone and Internet shopping – With this you can purchase items remotely.
Extras – Don’t forget that you can get all sorts of additional goodies with credit cards like airmiles, travel insurance and store discounts.
Remember there are pros and cons – Disadvantages:
If you withdraw cash, you will pay a higher rate – So many people misunderstand this and get into difficulties.
Credit limit exceeded – You are only limited to a certain credit limit.
You could get into worse debt – credit cards offer a feature, which can make people, spend more than what they can actually afford.
Fraud is easier – When using your credit card remotely, you have a higher chance to be a victim of fraud as card details may be taken and used by a third party.
So now you know the advantages of credit cards AND the disadvantages, hopefully you can make the right decision.
Tags: advantages of credit cards, credit card advantages
Posted January 16, 2012 by Chris @ DoYouWoo under Credit Cards, Debt Counseling
