A credit card is something that many people have. However, there are some people that are concerned about them and feel that they should not get them. It is right to give it some thought and be cautious. If you understand how you can use them to your advantage then this can really help, but you need to make sure that you will be able to be sensible with the card. Only you will know whether you can trust yourself and some of us find it much easier than others to be responsible with money. This could be due to a number of reasons and it is not someone’s fault if they are not that responsible but if they can identify that trait in themselves then they can make sure that they make the right decisions.
Advantages of credit cards
Credit cards give you a certain amount of freedom when you are shopping. It makes payment easier and quicker but also you will get interest free credit on most purchases until your statement arrives. This means that you effectively can buy now and pay later with the card, which can help you to manage if you do not have any money left and are waiting to be paid and need to buy things. The card issuer will allow you to repay everything that you spent and have no interest charge at all and a majority of people who have credit cards do this. However, you can also delay repaying all of what you owe and just pay a minimum amount or more, without having to repay the full amount that you owe.
Credit cards also offer some insurance and security, particularly for online purchases. If you order something and it does not turn up or it isn’t what you expected and the seller will not refund, then you can claim back through the credit card company. You will also find it difficult to buy online without a credit card, although it is possible. You can use debit cards but these are less secure as they will not insure purchases in the same way and may not have such good anti-fraud departments.
Disadvantages of credit cards
There are also some disadvantages with credit cards. As you only have to repay a small minimum each month, it means that you can potentially stay in debt for a very long time. If you just repay the minimum then it can just cover the interest and a tiny bit more so it can take a very long time to repay and if you keep spending on the card, you may end up not repaying it for even longer. The interest on credit cards tends to be on the high side, compared with some other types of borrowing.
Having a credit card can also tempt us to buy more than we otherwise would. If you rely on cash or a debit card, then you can only buy up to the value of the money you have in your bank account. You may have an overdraft but generally this will be small anyway. By using a credit card, you will still be able to buy the things that you want and it is easy to forget about the cost of the interest on the card and that you will need to think about repaying it in the future. So, you might buy extra things, because you can, perhaps things that you do not really need or things that you would normally feel were too expensive. Some people even see the balance on the credit card as money that is theirs to spend and so feel they should spend it all and do not really think about paying it back. They have the idea that because it is their money then that is not something they need to think about and they do not focus on the interest or the cost.
It is therefore up to you to think about whether you feel that a credit card would be a good choice for you. Consider whether you would be able to take advantage of it, pay it all off when the statement arrives and enjoy the advantages that it brings. Alternatively, you may feel that you will be likely to overspend with it, just repay the minimum and end up with expensive debt. The decision is obviously yours, but you need to think about whether it would suit you or not. It might sound like a fun thing to have, but think about the risk that you might be in debt long term and the effect that might also have on your credit record. It may not be worth it. It is good to think about what sort of person you are and whether you would use the card to your advantage or whether it would be a very expensive and risky thing to get.