Credit Cards – Advantages & Disadvantages
Some people like using credit cards and others avoid them. Most people who like them do not understand how they work and gain a big debt while those people who treat them carefully because they do not know how they work.
There are disadvantages of having a credit card. Nonetheless, there are even more benefits of having one. Here we are going to look at some benefits and drawbacks of credit cards.
Benefits:
1. Free credit is the first reason why credit cards are gaining a great popularity. They grant you with credit so you can buy something and not have to pay for it until a deadline. This is a free credit if you pay the full amount duly.
2. They offer a safe and easy way to pay for things in the UK and abroad. In particular, if you buy things over the telephone, through the internet or by email.
3. Buy protection – credit card providers and retailers are obliged to take shared responsibility for faulty purchases. It means that if you buy something, estimated in the range of ₤100 and £30,000, it is assumed to be faulty you are allowed to refund from the card provider.
4. Fraud protection. If you have become a victim of a scam, you will not need to pay if a scam uses your card.
5. Worldwide acceptance. They are accepted all over the world. And you do not need to exchange them for other currencies.
6. Many cards offer different incentives such as charity payments, loyalty points or money back for using your card.
Drawbacks:
1. The great disadvantage is that you will have to pay interest if you do not cover your balance totally each month. Interest rates are different with different card providers but can be about 20%.
2. They set a credit limit, which may be less than you thought. With a poor credit rating or obtaining a card for the first time your credit limit can be restricted to about £500. People with a good credit rating or who have been using a card for a long time can get a credit limit in a range of about £4,000.
3. I should have included this in the benefits section but a credit card teaches you to control your money and be careful with them, because in other case you will gain enormous debt.
4. The fees are a great drawback because they are the highest on the market. Fees include for money advances, interest rates and late payments. If you fail to manage your card in a proper way, you will be subjected to such fees, which will increase your balance.
When there are a few drawbacks to credit cards, there are a wide range of benefits. Careful and smart management can reduce all the disadvantages, allowing you to reap only benefits of obtaining a card. Do not forget to make a comparison of credit card rates before you choose a card as these can differ among card providers.
Need companies which are worth filling out credit card applications? This is not an easy task.
We highly recommend you to read this credit cards blog before you dash to the credit card applications. Learn what is smart and what is cranky to do on this market. Everybody can fill out online form, but not everybody is capable of finding a provider with really great offers.
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