Credit card is a plastic card which contains your credit account established with a back or other credit card institution which allows you to buy or purchased items and goods and pay later. Many issues have arisen over the years arguing about having a credit card or not. Some are in favor, others oppose even if having a credit has been a part of American way of life. So let’s take a look on these arguments by presenting the advantages and disadvantages of having a credit card. First, let’s take a look on the disadvantages of credit cards.
Credit cards can be very costly if you do not watch how you spend it like if you’re using it even if you don’t need it. If you have credit card, you may be paying a high cost of your finance charges and the accompanying rates. Your debt load increased as well as your dept in income ratio. And because you are paying the interests and financial charges, there is a decrease to that amount that you should be saving in the bank. You have less money for household monthly expenses. You can easily overspend and create real bad financial difficulties (Kimberly Credit 2006).
When using a credit card, you don’t only pay for the amount you’ve spent, but you will also pay for the interests. This would mean that the item you bought would actually turn to be more expensive than its original cost. If your payment is late, there is of course a charge, and the average late charge is about $30 per day (Turner 2007). Only about 40% of credit card holders pay their bills on time every month, which means that the remaining 60% are in big debt which may rise exponentially. This pointed out by the U. S. Mint (The Mint 2007).
On the other hand, there are lots of advantages opposing the disadvantages in having and using a credit card. Credit cards give you a lot of convenience. This would be the biggest advantage of in using a credit card. You don’t have to dig around for cash, or try to find your checkbook in your bag, and it can be easily hand to the cashier or clerk. It is acceptable in the most part of the world. For example, you went to Spain, then you don’t have to write an American check, just hand your credit card (Edwards 2006). And you can buy the things you need right then and there even if you don’t have cash on hand.
Say for example you badly need something, you don’t have enough cash in you wallet, and so your credit cards will save you. Using credit cards will give you credit score that can be used for your future expenses, for example you will buy a house and lot. Your credit report will be updated every month where the lenders look at your transactions of bill payments and charges; it is like your financial life blood (Edwards 2006). If you pay off the entire balance every month, credit card can help you budget your monthly bills. You will know exactly how much you have to spend for a month (Edwards 2006).
There is also what we call credit card float, to avoid the interest charges. It is the time from which you are charged for an item you purchased and the due date of full payment. And you can really use this to your advantage because sometimes you will get another month to pay before they charge with additional interests (Edwards 2006). Many companies give rewards to the credit card holders. These include cash or money back, airline rewards, and other merchandise programs (Edwards 2006). The most popular award is that of airline, which gives you free life and baggage insurance.
You can also earn points and get free tickets (Lukac 2006). Another advantage in having a credit card is the protection for your money. If your credit card is stolen, you will only be responsible for the first $50 but if you reported immediately within 24 hours most likely that $50 will be waived. Also, in the event that merchant do not honor refund request, you can easily dispute the credit card and you have your credit card company to help you (Edwards 2006). With the advantages identified, despite the disadvantages given, I am taking the side which is in favor of having credit cards.
True that owning one will give you a lot of disadvantages but I believe that the problem lies on how you use your credit card. In using credit card, you should be responsible enough to pay for your bills every month and on time, so that you are not charged with big interests. One should also be disciplined in spending the money. Don’t use it on purchasing unnecessary things or else you might find yourself deep in debts. You just have to be watchful on your expenses so that you won’t end up having to pay the bill you are not capable of paying.
Again, it is a safe alternative to cash as your protection in theft. You don’t have to carry big amount of many because in case you need bigger amount of money, it bails you out those emergencies. You also build a good credit history which allows you to easily buy a house, a car or a lot because your credit history will serve as your credibility in paying. And of course, it gives you time to pay. If you don’t have money the moment you purchased an item, you still have time to save enough cash to pay the bill that will come (The Mint 2007). Credit card is also a very convenient transaction medium.
For example, you want to order or buy an item through the telephone or internet. Then, you only have to give your credit card numbers. Thus, it is more convenient than sending cash or check via mail because sending cash or check is not possible through this media. And your merchant doesn’t have to wait for your cash payment or check. They say that convenience of having a credit card can be a curse because if offers the instant ability to buy any product of item you want that very moment. But then, if you are responsible enough, then these will not be your problem.
Because if you are not responsible, most probably than not, your credit card will be overcharged (eFinanceDirectory 2007). Others say that people will fall into debt because of credit cards. However, this will only happen if the owner is irresponsible with their use of their credit card (The Mint 2007). If cardholders are well-informed about their bills, the only person to get into the debt he can not catch up is the one who chose to. There are also some people who have “earned” money through credit cards because they pay their bills on time.
A man named Sumeet Goel benefited a lot with the Reward Points Program of his credit cards, 3500 in just one year. His credit card was offered by a bank which gives as mush as 4% cash-back on department stores shopping and 2. 5% extra cash back on petrol purchases. “Remember ‘DISCIPLINE’ is the MAGIC word if you want to “earn” money & that too with free Credit ranging from 10-50 days instead of paying interest,” Goel said (Goel 2007). So you see, having a credit card is not really bad at all. The problem is not the card itself but the way the cardholder use it.
It takes a lot of responsibility in owning a credit card and a lot of discipline in using it. As long as you know how to use it wisely and carefully, you are free from all the problems that may arise if you become irresponsible. It would benefit you a lot if you use it wisely but it would be your silent killer if are not watchful. There are always positive and negative sides, the advantages and disadvantages of things. The key is to weigh each argument, look at the pros and cons, before deciding what really fits you and what will really benefits you in the long run. Works Cited “Advantages of Credit Cards.
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The-Advantages-Of-Credit-Cards&id=309159>. Turner, Steven. “The Disadvantages of a Credit Card. ” 31 May 2007. Ezine Articles. 6 November 2007 <http://ezinearticles. com/? The-Disadvantages-of-a-Credit-Card&id=587001>. “What are the Advantages and Disadvantages of using a credit card. ” 2006. Kimberly Credit, Inc. 6 November 2007 <http://www. kimberlycredit. com/advantages_disadvantages_ credit_card. htm>. “What are the Disadvantages of Owning a Credit Card? ” 2007. eFinanceDirectory. 6 November 2007 <http://efinancedirectory. com/articles/What_are_the_Disadvantages_ of_Owning_a_Credit_Card%3F. html>.