Advantages & Disadvantages of Credit Cards
Credit card is issued
by financial company or bank from which you can borrow funds, these funds can
be used to buy any goods. Credit card is fun .you can buy anything at any time
whether you afford it or not. It a most convenient way of shopping but by using
credit card you can fall in to pool of debt.
According to Business Finance Articles, it’s a best financial tool that you can use anywhere. Credit card have maximum limit so that the cardholder can borrow limited amount. Cardholder had to pay borrowed amount plus the specific interest amount. Cardholder has to pay his credit on monthly basis. If the user does not pay amount on time the company will charge interest on the amount till the payment is outstanding. While purchasing from credit card keep in mind you have to pay back. Credit card bill comes as a monthly bill
Advantages and disadvantages of Credit card
Advantages
·
With
the use of credit card responsibly you can handle emergencies, unplanned
expenses or any unexpected cost that arise when you have no cash to pay but you
have to pay back every amount you owe
·
If
you need to buy something expenses and you cannot pay whole amount at once then
credit card is ideal if you use it wisely
·
Like
RBS Credit
Card Online Services, every bank offer online login & services
to manage your account, check statements, pay bills online, activate or stop
any supplementary service.
·
If
you pay your bill full and on time you will get rewards like cash back, loyalty
points or air miles. Otherwise interest will be card more than reward. If you pay
your bill before time you will reward interest free days on future purchase as
well as discount. Always try to find car
·
While
there is a list chance of having cash lost or stolen, a credit card can quickly
canceled if you lost your wallet .You can inform bank of your card loss they
will deactivate your account so no one can use it. It remain just a piece of
plastic
Disadvantages
·
Credit
card companies charged high rate of interest. If you carry balance from month
to month. You’ll have to pay high interest charges. Now a days Interest charges
is more than 22%.so have to pay more than you initially charged in interest.
·
Most
credit cards have annual fees. It may cost from $25 to $1200depending on the
services and features of credit card. To avoid this annual charges get credit
card free from annual fee.
·
Another
disadvantage is ,other fees can quickly add up like when you miss a payment,
fees if you spend past your credit limit, fees for overseas transactions,
balance transfer fees and even some rewards programs fees
·
It
may blow out your budget. When you had done huge payment with your card you
have to pay it by next month and if you don’t pay it on time you have ti charge
high interest on it. This will blow out your monthly budget. So use credit card
wise and sensibly.
Tips for First-Time credit card user
1. Choose
your card sensibly: Choose
your card sensibly. Read out all the terms conditions and features and services
of card you are buying. Not all credit cards are same in terms of features and
services. Choose it according to your need.
2. Charge
only if you afford: Charge
only for those thing that is affordable to you means you can repay it with in
time limit such that no late fees or extra interest will be charges
3. Pay
off your bills monthly: Pay
off your bills with regularity-monthly. Only charged your card for those things
which you can repay it easily and on time. Otherwise late fees and high
interest rate will be charge on your payment.
4. Dangers
of debt: Debt has its own life.
It can increase day by day or year after year due to interest and late charges.
If you don’t afford a huge amount then don’t charge your card if you don’t pay
off the owe amount you payment will increase until the payment is outstanding.
5.
Don’t make minimum payment: when the stage comes in your life that you have
a huge amount to repay. Pay is quickly as you can.