Pros and Cons of Credit Cards

Are you considering getting rid of your credit card, or are you thinking of applying for one? Whether you want to get rid of or get a card, you have to understand the pros and cons of doing so. It helps to have a line of credit, especially when you need quick cash or are short on it during an emergency.

Pros

A credit card has several benefits, some of which include:

1. You can use the card almost anywhere in the world.
2. They increase your purchasing power because you can buy products and services online or over the phone.
3. They provide you with access to cash in times of emergencies.
4. Buy whatever you want and pay for them in monthly instalments. Some stores will offer discounts and rewards if you purchase using your credit card. Use the accumulated points to get better deals when you go shopping again.
5. Some lenders offer cash back rewards for using their cards.
6. When you use your credit card, it enables you to build a credit history, providing you with better options when you take out a loan such as mortgage.
7. Using your card and paying the balances on time may improve your credit score.

These are only some of the benefits you get from keeping or getting a credit card. If you think your credit score is too low to get a card, or your credit limit has been reached, you do have an alternative. One option is to get a payday loan in Oakville, which is similar to a credit card or other lines of credit. However, payday loans provide you with fast cash, they can often be issued faster than a credit card, and can be accessed from the convenience of your own home.

Cons

A credit card may have several advantages, but it also comes with disadvantages that you must be aware of, these include:

1. A credit card gives one the feeling that you can spend more than what you make, because you can have a running balance on your credit card. This causes may to carry a large outstanding balance that can be hard to pay off.
2. Failure to pay credit card debt on time may affect your credit score negatively.
3. When you default on your payments, you will incur late fees and interest on top of the principal.  If you're over your limit, many credit card providers will include an “overlimit fee”.
4. Having too many credit cards can be detrimental in the eyes of lenders.
5. A consumer may rollover their balance over several months, leading to more debt, additional fees, and higher interest rates.

These are some of the noteworthy disadvantages of having a credit card. You must consider these cautiously when you decide to apply for a card.

A credit card comes in handy in certain situations; however, knowing the pro’s and con’s of each financial tool is important when making decisions regarding your finances.