Since financial institutions introduced credit cards, many people have grown fond of them and increasingly use them to purchase items or get by financially. However, there are many things to consider if you have credit cards or want to apply for new ones, such as their pros and cons. This article will cover the pros and cons of using credit cards.

Advantages of Using Credit Cards

The benefits of using credit cards can outweigh the disadvantages if people use them responsibly. Here are some pros of using credit cards.

Convenience

A credit card is easier to carry or conceal than cash, and it’s also easier to track the amount of money you have than the exact amount of cash. In addition, if someone steals your credit card, or you lose it, you won’t be liable for any charges and won’t lose any money, unlike cash.

Builds Your Credit Score

Credit card companies relay account data to the main credit bureaus monthly. Most people who responsibly use their credit cards, credit period and repay their dues in time can build impressive credit scores. This allows them to get loans in the future without any challenges.

Rewards

Using credit cards comes with some rewards. Most credit card providers offer rewards such as gas rebates, cash back, airline miles, and hotel points. These rewards can reduce the cost of your purchases, and you can also trade them for unique amenities such as special gifts and exclusive access to shows.

Currency Conversion

Although currency conversion fees may apply, you can use your credit card for international purchases with a foreign currency. Some credit card companies even waive fees for international purchases you make with their credit cards.

Purchase Protection

If you purchase a product with your credit card and find out later that it is defective, you can dispute the charge and return the product. However, you may have to wait until the agency investigates the issue before getting your refund.

Offer Emergency Line of Credit

Although you’ll have to pay back the amount, credit cards offer financial safety if you don’t have enough savings or cash to cover unexpected expenses.

Disadvantages of Using Credit Cards

The cons of using credit cards include, but aren’t limited to, the following:

High-Interest Rates

Credit cards’ annual percentage rates (APR) are usually higher than other interest rates. Carrying your balance from month to month attracts interest charges. For instance, purchase and cash advances interest rates for new credit cards can be as high as 22.15% if you cannot repay them monthly.

Debt and Overspending

People with credit cards often spend more than they would with cash. Since they are easy to use, you can overspend and make impulse purchases if you aren’t careful. Most people view their credit cards as supplemental income forms and purchase items they want rather than what they need. As such, this leads to overspending and can leave you with expensive debts.

Annual Fees

Although you can get credit cards with no annual fees, most credit cards have them. The cost usually varies depending on the card you want; the higher the amount you get, the higher the annual fees.

Credit Card Fraud

Although you can’t be liable for unauthorized transactions in your account, dealing with credit card fraud can be time-consuming and stressful. Several credit card fraud schemes target credit cards with sophisticated technology. Scammers can use phishing techniques and skimming devices to steal your credit card information.

Credit Score Damage

Credit companies record missed payments and ongoing debts in your file. Missing your monthly payments reduces your credit score rating and can impact your chances of getting other loans in the future.

Credit cards have pros and cons that you should consider before using them. While they do provide a financial safety net and a chance to get other loans if you use them responsibly, you may struggle with debts and low credit scores if you overspend or miss your monthly interest payments.