1. Credit Cards: Introduction
  2. Credit Cards: A Brief History
  3. Credit Cards: What Are Credit Cards?
  4. Credit Cards: Terms Of Agreement
  5. Credit Cards: Types Of Credit Cards
  6. Credit Cards: Making Payments
  7. Credit Cards: Pros And Cons
  8. Credit Cards: Choosing A Credit Card
  9. Credit Cards: Conclusion

By Brigitte Yuille

The ease in swiping a credit card for a purchase has its pros and cons. It may either help when handled properly or become a detriment. If you are able to pay your bills on time every month and not carry over a balance, credit cards are a great convenience. The cards can also land you deep in debt. This often occurs if you're unaware of the terms of the credit card agreement, and if you carry too many cards.

Pros

  • You can use them practically everywhere, especially overseas.
  • They can boost your purchasing power because they can be used to buy goods and services over the phone, through the mail and online.
  • They provide financial backup in the event of an emergency, such as an unexpected healthcare cost, job loss or auto repair.
  • They allow you to purchase items and pay them off in monthly installments. They offer discounts at stores and rewards. For instance, when you make purchases using the credit card you can collect points; these points accumulate and can be used to get free items, such as airline tickets.
  • Some cards may offer cash back as an incentive to use the card.
  • They can help build your credit history.
  • They keep a record of your expenses, helping you to monitor your financial activities.
  • They help raise your credit score, such as the FICO credit score, when you pay balances down by the due date. This improved credit history paves the way for lower rates borrowing rates on other loans, including a mortgage.
  • Credit cards allow you the right to dispute billing errors and defective merchandise.
  • They allow you withhold payments.
Cons

  • Credit cards can have their disadvantages, though, especially when they're used in an unwise manner.
  • Some consumers feel compelled to spend more money than they have.
  • Consumers may continuously roll over a balance for several months.
  • When you default on credit card payments, you are charged with late fees and interest, increasing your debt load.
  • Carrying a large amount of credit cards also isn't too favorable in the eyes of lenders.
  • Acquiring too much credit card debt can ruin your credit score.
  • Studies have indicated credit card debt as a significant factor in consumer bankruptcies.
  • Credit card fraud is a possibility.
Avoiding Credit Card Pitfalls
In order to avoid the pitfalls of credit cards and maximize their benefits do the following:


1. Keep track of your purchases by closely reviewing your monthly statements.
2.
Have a budget and avoid overspending.
3.
Make an effort to pay off credit card balances at the end of the month.
4.
Make purchases with reliable companies and take extra precautions when making purchases online.
5.
Report stolen cards immediately to the credit card company.


Credit Cards: Choosing A Credit Card
Related Articles
  1. Personal Finance

    How Many Credit Cards Should You Have?

    National stats indicate most consumers have three or more cards - are you one of them?
  2. Personal Finance

    Credit Card or Cash?

    Credit cards are convenient to use, but not always the best choice. Here are 5 times you shouldn't pay with a credit card – and 5 times you should.
  3. Small Business

    How to Use Small Business Credit Cards

    A small business credit card can be a convenient way to increase your company's purchasing power, but must be carefully managed.
  4. Personal Finance

    Take Control Of Your Credit Cards

    The plastic in your wallet doesn't have to hurt your finances. Learn how to manage it responsibly.
  5. Personal Finance

    Terrible Credit Score? Try These Credit Cards

    When your credit is less than stellar you have fewer choices. But some are still better than others. Here's our read on which cards to get.
  6. Personal Finance

    Why More Millennials Need Credit Cards

    Here's why more Millennials should have credit cards – even though a majority don’t.
  7. Investing

    Investing In Credit Card Companies

    This investment requires keeping an eye on consumer indexes and the overall health of the economy.
  8. Personal Finance

    How Many Credit Cards Should You Carry?

    If you have ever wondered whether you should carry one, two or more cards, read on and we'll tell you.
Frequently Asked Questions
  1. What's the Best Way to Contact Warren Buffett?

    Learn how to contact Warren Buffett and what kinds of contact is most likely to receive a response from him or from his company, ...
  2. What is the Financial Services Sector?

    A diverse group of companies, beyond banks and credit unions, comprises the financial services sector.
  3. Who are Whole Foods' (WFM) main competitors?

    Whole Foods' main competitors are Sprouts Farmers Markets and Trader Joe's. However, the recent acquisition by Amazon my ...
  4. What caused the Stock Market Crash of 1929 that preceded the Great Depression?

    Find out what led to the stock market crash of 1929, which in turn led to the Great Depression. It sparked a nearly 90% loss ...
Trading Center