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Pros and Cons of Having a Credit Card

Guest Author | 16 Feb, 2018  | Follow Author | Add to my Favourites 
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With a number of banks offering quick access to plastic money, it has become difficult to resist. If used responsibly, plastic money is a key financial tool, which may make it easier for people to manage their finances.

Easy and convenient to carry, credit cards have a reputation of consumers falling into huge debts. Here is a list of advantages and disadvantages to consider before you start to use one.

Pros of a credit card

Credit cards let you spend anywhere any time without having to carry cash. Some of the primary advantages of owning a card are as follows:

•    Buy now, pay later

You may use the card now to make your purchases and pay the amount later at your convenience. This means you carry an increased purchasing power and may repay the same gradually.

•    Higher credit score

With the use of a credit card, you may maintain a good credit score, if you make your payments on time. This will benefit your credit history and make it easier for you to avail of loans and get homes on rent.

•    Rewards

Many consumers are lured to use credit cards for the rewards they promise. Every time you use the card, you earn points on the same. The reward system varies from bank to bank and they may be used for cash, miles, merchandise, or gift cards.

•    No need to carry cash

Another big advantage of using a card is that you will not have to carry cash all the time with you.

Cons of a credit card

While having a credit card offers you multiple benefits, there are some downsides as well.

•    Easy to overspend

Since you are not paying by cash and simply swiping the card, you might end up overspending. A card is easy and convenient to use, but it may lead you into a debt trap. So you need to remain careful while using the card.


•    High interest

The biggest trouble with using a card is paying the interest. You may dig deeper into debt, if you use the card for all your purchases and not make timely payments. In order to avoid the same, it is advisable to pay off the outstanding amount within the grace period.

•    Late fees

If you default in the repayment of the debt, you will have to pay a late fee, which is significantly high. The fees vary from bank to bank and may add up in case of consistent default.

•    Destroys your score

If you do not use the card carefully, you may end up destroying your credit score. If you miss the payments, the credit score will go down and will have an impact on the future credit applications you may make.

While there are a few drawbacks of using credit cards, if used wisely, it has numerous benefits. Hence, make sure you take your financial decisions rationally and carefully.

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