A credit cards can be used for making purchases, decrease the cost of expensive debt or even to earn cashback and rewards. It is fundamentally a kind of loan, wherein the cash one spends on his card gets borrowed from a lender like bank. Interest gets added to the amount one spends if he doesn’t clear the balance at the end of every month. Before apply for any credit card you should know about Credit card advantages and disadvantages.
It is true that credit cards have changed the lifestyles of people and the world has also revolutionized by them. But In case you are making use of a credit card in a clever way then it is possible to get additional protection on your purchases, borrow for no price and even get cashback or rewards for spending on the card. But, in case you are not performing with discipline you might end up paying so much of interest and piling up debts which are a struggle to pay off.
There is Swiftness
If a person wants to purchase something quite expensive and cannot afford to pay for the same all in one move, then a credit card is perfect as long as an individual uses it wisely. A zero percent purchase credit card permits the users to pay for the item in complete and then scatter the price over a number of months, by making a sequence of payments to clear balance.
As long as one pays this total off before end of the interest-free time then he won’t get charged anything for making use of the card. But in case a person has missed the deadline, he would have to pay a penalty in the condition of interest being added to balance every month. Please make payment before deadline comes to end to take maximum credit card advantages.
Borrow for Nothing?
There are many credit cards which offer zero percent periods. It means that one can effectively advantage from an interest-free loan. Though, he needs to make minimum monthly payments and clear his balance before the zero percent offer ends. Otherwise he will be charged interest. Remember that not everybody requires a protracted interest-free period,but even if a person pays his credit card bill in full every month, he will still borrow for nothing.
Make Money while you spend
There are even cards which cater incentives to spend like loyalty points, cashback or air miles. It simply means that a user can actually make cash from his credit card. These enticing offers are only valuable if a person pays his bill in full, else the interest one shall be charged will be much than the value of rewards.
The Factor of Protection
A person gets more protection if he pays with a credit card than if he pays with a debit card, check or cash.
In case a user buys something which costs between around pound one hundred and pound thirty thousand, he will get his cash back if it all turns out to be wrong. In simple words, it means if the company goes broken, or the purchase is faulty or does not turn up, one won’t lose out because he can claim the cash back from his credit card provider.
A person also enjoys protection if his card gets used fraudulently. Here the card provider must refund the money. It won’t work however if the card provider finds that the user was negligent. So, the users have to make sure that they don’t write their PIN number anywhere. Payment protection and multiple currency support are big Credit card advantages.
You know the interest rate is not the only price of a credit card. A penalty can be charged if one is late in making his monthly payment or miss it overall. He will also pay a penalty in case he exceeds his credit limit. So, it gets crucial to keep a track of one’s expenditure.
And yes, there is no need to get tempted to withdraw cash on the credit card. Most of the card firms charge a payment to withdraw cash from an ATM, characteristically about two percent. One will also start to notch up interest immediately because there is no interest-free time on cash withdrawals.
Look Out the Scary trap
It is vital to remember that a credit card is a type of borrowing. You purchase now and pay later. Moreover, risks are also there!
In case a person doesn’t pay off his balance in full every month, he will begin to chalk up interest. His debt can swiftly get out of control, specifically if he pays off just the minimum monthly amount.
One should therefore always try his best to pay more than monthly minimum. Moreover, he should also think of his credit card just as a short-term borrowing capability. Of course, one can find out how his balance gets affected by altering his monthly repayment amount with the credit card calculator.
Grab the right card
One should make sure that he picks the correct card otherwise he could end up paying much more than he needs. If a person gets an expensive time coming up, perhaps he is shifting in a new house or there is a wedding in the family, then he should go for zero percent purchase card. In case a person requires a new card because he has piled up expensive debts on another credit card, it is a zero percent balance transfer offer he needs.
Once you get into the circle of credit card, you over spend. You don’t think so much on buying a thing and just go for it. Such a deed is not at all healthy for your future. Maybe, for that time you successfully bought that gorgeous gadget but what’s next?
The point is that a study shows that people who make purchases through credit cards develop a habit of spending more than needed. They get used to it and gradually the habit overpowers them. Of course, it is good to have the things you want but what is the point if you end up in bankruptcy?After all, you cannot always make use of credit cards. Once such an extravagance takes place in your lifestyle, things at get bad and even worst.
Thus, Credit cards have their pros and cons but if you are a wise user, you need not to worry. Of course, your life will become a lot easier and stylish with credit cards, but it would happen only if you have your whims tamed. You can take credit card advantages by paying your bill on time.