Advantages:
Credit cards are used by number of people. Its demand is growing day by day. It has many advantages:
- If you have an unexpected, large purchase, credit cards can be used to meet out these unexpected large purchases instantly and settle up later.
- It enables you to spread the cost of expensive purchases, like computers. Rate of interest is charged but if you are dealing with a issuer who is providing low rate of interest, this needn’t be too costly.
- You become tension free about how much cash you should carry while going out. Carrying credit card is a safer way instead of carrying cash.
- Many purchases need card for payment like Car rentals or Hotel bookings. They dont accept your business unless you have a valid card. Therefore, credit cards are required in case of some deposits.
- Sometimes it so happens that when you buy an airline ticket or a holiday using your credit card you will get free travel insurance.
- It can be used as a loss protection. Suppose you have cash in your pocket any you are out for shopping. But it may happen that pick pocketing occurs and you lose cash. You can feel safe with the credit cards. In case of loss you can get other card.
- If you are willing to go outside the country then you need to change the cash money according to the country. Exchange rate in normal banks becomes high due to lot of transactions. But credit card exchange rate is a bit better.
Disadvantages
- It’s easy to lose track of what you’ve spent – lots of small purchases can quickly add up, especially as statements come through just once a month.
- If you don’t keep up the minimum repayment, you can get into trouble. The goods you have purchased may be repossessed, you’ll end up paying a lot more than the item is worth and you may affect your credit rating – making it hard for you to get a mortgage, car loan or credit card in future.
- Credit cards issue a monthly spending limit. Though they’re generally very high, if you exceed it, you can face even bigger charges.
- Credit cards can feel like ‘free money’ and the temptation to spend money you haven’t got can be hard to resist, especially when faced with special offers and discounts.
- It can actually work out cheaper to get a loan with regular, fixed repayments than credit. It’s worth investigating this avenue, too.