The pros and cons of Credit Cards

Credit Cards are one of the most convenient ways to complete payments and to maintain control of the finances. There are many advantages and disadvantages of using credit cards that should be taken into account.

Should you use credit cards? Although credit cards are a useful tool that can be used with convenience, it is important to know how to use the credit card wisely when it comes to maintaining a good history with the credit card company. Unfortunately, credit cards do not come with instruction manuals and therefore many people find themselves facing credit card debt because of these facts.

Advantages

While using a credit card you can take advantage of rewards programs such as rewards points, cash back or airline travel miles that can help you to make the most of the money that you are spending. The card holder receives a certain amount of rewards for the money that is spent on the card, usually per dollar.

Credit cards allow you to make purchases through a variety of mediums, including the internet and over the telephone, even buying something from an infomercial that you viewed on the television. There are not many other payment methods that are as flexible.
If the credit card purchases are repaid within the grace period of a credit card (which often lasts twenty one to twenty eight days) than the purchase can be paid without accumulating any interest on the credit card.

Credit cards can allow you to budget. For example, if you choose to spend no more than one thousand dollars per month on your variable expenses the consumer can do so with the use of a credit card and once you have reached the spending limit it is time to stop spending.

Disadvantages

Credit card payments can easily become overwhelming when you are carrying a balance and are close to the credit limits of the credit card. If you are unable to control the spending than credit cards may not be the best payment options for you.

Credit cards are one of the most expensive financial services and can come with annual fees, high interest rates and over-limit and missed payment fees. These fees are charged to the balance of the credit card and can cause the balance of the credit card to quickly increase.
Credit cards can lead to spending without thinking and therefore can lead to debt as you do not often think about what is being placed on the credit card until you have to pay the credit card bill at the end of each month or receive the credit card statement in the mail.

Credit cards allow people to live outside of their means and accumulate debt as they are often used to cover expenses that the consumer is unable to afford. More than eighty percent of households are living outside of their means through the use of credit cards. This is a hard habit to break once you become accustomed to living a certain lifestyle of debt, while living outside of your means.