Credit Card Pros & Cons

Easy to use: Nobody roams around with a stack full of cash all the time; we carry only a small amount of cash with us. But an emergency may arise anytime with requirement of large sums of money. Credit cards come handy in such a situation when you don’t have sufficient balance with you. Credit card is also a handy way to shop online and carry out transactions.

Security: Cash is always prone to theft and if you ever lose cash then it almost becomes impossible to recover it. But that’s not the case with credit cards; you can always get a replacement card if your original card gets stolen. In case your card gets used for fraudulent transactions then you are liable to pay only a few thousand rupees at most. There are also some credit cards that have zero-liability policy under which customer is not liable to pay anything in case of fraud.

Purchasing Power: Having a credit card means that you can always make big purchases without thinking twice. You can pay that amount in easy monthly instalments. Normally, you would have to save for many months in advance before you buy that thing. Better to find out here what’s good for you before buying.

Reward Points: Even if you are not a shopaholic you can still earn cashback and take benefits of other offers by accumulating points on every purchase you made. Reward points are awarded for purchases, flight booking, and other affiliations of the card provider.

Exclusive offers and special rates: Banks keep on announcing special offers with associated companies every now and then. Sometimes, they announce exciting balance transfer rates for new and existing customers.

Spendthrift: This is the first concern of anyone who is looking for a new credit card. A credit card is a double-edged sword, if not handled properly; you could invite debt that will become beyond your ability to pay off. Credit cards are not access to “free money”, and when interest starts to pile up, you begin paying more than the purchase price of your goods.

Multiple Uses: A credit card should be preserved for only one purpose. If you use a balance transfer credit card then you should use it for that purpose only. A credit card with preferred rate for purchases should be only reserved for that. When customers start to use a single card for both types of purposes on their credit card simultaneously, problems start to rise. This, pragmatically, is a conflict of interest. The debt with lower interest rate is paid off first, which means that the debt with higher interest purchases will keep acquiring interest and your repayments won’t have any effect.

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