Using credit card have also benefits and demerits just like the other things in the world. Let us look out what are the benefits and demerits of the credit card.
Benefits when you using a credit card.
A credit card is safer than carrying money: carrying a credit card is much easier than carrying money with you. Because carrying huge amount can have a chance of be stolen. If you lost your purse with money than getting back is in very low cases. If your credit card is stolen then you can quickly cancel the credit card. It is safe and secured.
Most of the financial institutions offers the security processes in place to protect you. This is for if your card has been lost or stolen or if you found that someone has been used your account for a fraudulent transaction. Keep in mind that in any chance you become in such situations immediately you must contact your bank as soon as possible to report the issue.
Credit ratings on your credit card: The credit card account details and the payment history are fundamental part of your credit file as well as the credit rating. To keep your credit score high, you should have a good standing in your account. Keeping your credit score high helps you to increase in the chances of getting approval for other products including such as car loans or a mortgage.
You will get interest free days: If you pay your account balance in full within the given period ends or within a month. You will get a reward which is Interest free days. You can use it on the future purchase before the reward period ends.
Emergency line of credit you can get through Credit cards: The credit card can be said as Financially safety net. Because in case if you don’t have enough money or savings to survive any unexpected or emergency cost that arise there you can use your credit card. But keep in mind you have to repay the amount you use sometimes along with the interest.
Credit cards also have the complimentary extras: Credit cards give you best features. Because the credit card provides features like purchase protection, travel insurance and extended warranty insurance which helps to save your money. And also, the credit card issuer gives exciting other complimentary features such as flight offers, airline lounge passes and even you will get free wine on you dine. It’s all depends on your credit card companies, you must choose credit card after reading all terms and conditions. You can choose from this list of best credit cards, all the benefits and charges are mentioned.
You will able to consolidate debts and can save money on existing balances: with a low or 0% promotional rate of interest you can transfer your balance through credit cards to move existing high interest debts to a new account. This process helps you to save money on interest and also help you to pay off the debt very quickly.
Disadvantage of using a credit card.
Paying high rates of interest: If you are using a credit card you will have to pay interest on charges. The rate of interest on the purchase and cash advance can be as high as 22% per annum. Because of this if you are unable to on the given time you will be end up paying hundreds or thousands of amounts in the form of rate of interest each month.
Damage of the Credit: Missing to repay the credit card payments and ongoing debts will be recorded on your credit file. This can lead impact on your chances of getting a loan at the future.
Credit card fraud: There a lot of fraud game plan that target credit cards. You can be repaid for illegal transactions on your credit card. Using the credit card fraud can be a consuming in time as well as stressful experience.
Fees and rates of the cash advance: The financial institutions or the third party will make a very expensive when you use your credit card to cash out or when you make other equivalent cash transactions like as gambling or buying of foreign currencies. When the card holder uses their credit card for a cash withdrawal then he will be charged an advance fee of worth around 3% of the total amount of transaction. And it can also allure a rate of interest at 19% to 22% right way.
Surcharges on credit card: When you pay with your credit card the business will often apply a surcharge. The fee is almost 0.5% to 2% of the total cost transaction in the case of Mastercard and Visa cards. But when you take AmEx cards it will almost 3% amount for the total cost of transaction.
Other fees can quickly add up through Credit card: when you miss a payment to repay you will be charged a certain amount which is depending on your card. And also, you will be charged for the fees on the overseas transactions, if you spend more than your card limitations, Balance transfer fees and also for some program fees on reward.
Here, I have mentioned the merits and demerits of the credit card. You don’t have to be worried or stressed when you use your card properly like paying the on time and all. You can choose whether to go with the credit card or not. If you don’t have enough money, then using a credit card will be the great option.
