Posted on 2014-01-11
Most of us cannot imagine life without credit cards. The concept of plastic money and the convenience of swiping them for shopping or paying for anything have made our life so easy that we often do not realize that using these cards can have some negative effects also. Yes, credit cards do come with their own share of pros and cons and it would be better if you are aware of them.
Pros of using credit cards
When it comes to credit cards, convenience is the first thing that comes to our mind. They can be used anywhere and especially when we are overseas they come very handy.
The hassle of carrying cash and keeping it safe have almost vanished with the advent of credit cards.
Online shopping thrives on credit cards and today using the plastic cards to make purchases over phone or online has almost become a norm.
Credit cards help us in making big purchases like pieces of furniture or car as we can pay later.
Unexpected financial crises can be dealt by using credit cards effectively.
Credit cards boost saving as they fetch discounts and also points which can be encashed or used to make purchases also.
Cons of using credit cards
Credit cards often tempt people to overspend. The irresistible temptation to shop and dine out often causes financial stress. We often end up buying things that we actually do not need.
It often becomes impossible to maintain financial discipline and people are known to get into debts because of reckless use of credit cards.
If you are unable to pay the credit in time, you will have to pay the interest along with the original amount and this actually amounts to loss. Moreover, your future income gets tied up with the credit card.
Lending institutes check credit card usage history and having too many cards or too much debt can affect the credit score.
Consumer bankruptcies often occur due to unconstrained use of credit cards. Accumulated debts over a period of time lead to such bankruptcies.
Inability to pay on time may lead people to lose merchandise they bought with plastic cards.
Credit cards need to be used judiciously. We need to be aware of their disadvantages and check our temptations. Financial discipline and forethought can save us from financial problems. We need to think twice before making any purchase with credit cards. When used moderately, credit cards can give us a lot of financial freedom and can prove to be a real boon of the modern world.