CREDIT CARD PROS AND CONS

ADVANTAGE

The credit card allows you to make purchases over the internet or by phone

  • Easy to carry, easy to use. Credit cards are accepted in more places than charge or prepaid cards.
  • Safer than cash. If your card is lost or stolen, you will only have to call the bank to cancel it. If it has been stolen and used fraudulently, it is more likely that you will get your money back.
  • Buy now, pay later. If you don’t have the money you need until the next day, a credit card provides you with a financial extra – although you should only use it if you are convinced that you will be able to return the money.
  • You are protected. With credit cards you are protected against any purchase over $ 100 and under $ 30,000 – so if you book a vacation and the provider goes out of business, the card entity will cover the cost. Or if you buy a faulty television and the seller refuses to pay you back, the credit card company would refund you.
  • Freebies often accompany credit cards – benefits like airline miles, reward points, and cash back.

CONS

One of the great disadvantages of credit cards is that you can get into debt completely

  • High interest payments. If you are not honest with the balance you have at the end of each month, you will have to pay additional interest to your outstanding balance.
  • Beware of the debt spiral. Forget a single payment and the interest will start to grow. Unless you pay what you owe each time, you will quickly spiral into debt if you continue to spend with your card.
  • Additional fees. As with interest, you could find yourself paying additional fees or penalties for exceeding the credit limit or missing a card payment. There are additional fees, such as using the cash machine.
  • Deposits and pre-authorizations can cut your credit limit. In some places, such as hotels, gas stations or car rental firms, they may use your credit card to request a pre-authorization. In this way they can charge you drinks or services that you perform within their premises and do not pay for them. They will set an amount as part of your credit limit – usually a nominal amount – and while you’re there, you won’t be able to spend the money. Even after this amount is removed, it could take a few days for your credit limit to return to normal.
  • Expensive to be used abroad . This factor is highly dependent on the card. Some are designed for travelers, while others are very expensive with respect to fees and other charges.

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