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Credit Cards: Advantages And Disadvantages

Aug 17, 2007
The fastest, easier and most cost-effective payment system is the credit card. This system is very popular all over the world and will be developed further in the future. Banks firms are offering new and spectacular features yearly. The future credit card owner has only the dilemma of choice. He must carefully study every offer and revise his payment possibilities to suit.

The cards important advantages, such as the ease of purchase or the purchase power, and the protection of certain purchases, are making our life easier and help us to solve problems sooner. Having a good credit history is also very important, when the cardholder is applying for loans, rental or jobs. The card owner can use wisely the credit card features and he will avoid spending outside his budget. A wisely chosen card will solve all your immediate problems.

The disadvantages can be important if the card is not wisely used. The biggest disadvantage is that they are inviting people to spend more money that they don't yet have. Many credit cards are not asking to fully pay the balance monthly, so a cardholder can spend up to ten times more that he has on his card. But the spent money must be paid off, plus interest which accrues every day until you pay the balance. The longer the cardholder waits the more amount of money he will owe because the issuers are charging the interest monthly on every borrowed penny.

The banks and firms are charging an amount of money as interest on every balance unpaid at the end of the month. This is the issuers way to make money. If a credit card is not used wisely, people can get into debt or even bankruptcy. If a cardholder owes money to a bank, he may pay them up to 20% interest. This is 10 times as much as he can expect to earn off his savings.

Credit cards can be stolen, as can cash. The card can be stolen if its owner loses his wallet or some cracker can find the credit card number, using a receipt, from a web site or over the phone. The cracker can use the cards number to rack up debts in the name of the cardholder. If the cardholder realizes that his card number was stolen, he can report it to the bank to cancel the card and he will be not charged for the purchases made in his name.

To avoid any problems, there are several measures to take to prevent credit card fraud, such as:
- don't loan the credit card to anyone
- give the credit card information only to trusted web sites or companies
- if you lose the card, report immediately this fact to the credit card company
- check your statement with attention; make sure that the charges belongs to you.

The credit card can be his owner's best friend in the emergency situation. Used wisely and sparingly, the credit card can really help you out a tight spot.
About the Author
Devin Gilliland provides advice on how to apply for credit cards at Credit-Wisdom.com.
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