Merits and Demerits of Credit

Well, we know money has power but does that mean the plastic money too. Oh Yes, how could we forget that credit and debit cards are here and the one real component is a credit card even if you don’t have your bank balance in place you can always swipe clean and do your shopping. The plastic money for some is very useful while for some it is a burdensome after seeing the long list of bills at the end of the month. Here are some of its advantages and disadvantages of using them. I am sure, it will help you choose your options in a correct dignified manner.

Advantages:

Easy purchasing power

Credit cards helps you lot while you go for shopping, as you do not have to carry large amount of cash with you. Some companies and hotels do not even accept cash payments so it is fruitful to use credit card while you are out.

Credit protection

Suppose, if you left some of your purchases behind then you can claim them back by showing credit card statement in the case if the original receipt is left behind. Some credit cards also offer free insurance and other perks.

Credit history

Bearing credit cards offer good benefits in the longer run, suppose you want to apply for some loan or mortgage. Some companies even look your credit history before hiring or job applications.

Emergency usage

Credit cards help great deal in the times of emergencies, this will help you avoid unnecessary spending for few dollars

Disadvantages:

Huge spending

Credit cards have major disadvantage that you spend more than your budget is, at the time of purchases you don’t realize what is happening and later you realize.

Higher Interest rates

Some credit cards companies allow you to take your balance forward to be paid later while some companies have stricter rules. If you do not pay them money at the end of the month, you may end up paying them higher amount of interest and other charges.

Credit card Fraud

Credit cards may bring in lots of comforts but when they are lost they amount of loads of losses, even if your credit card number is stolen can create a big havoc in your life. But there is benefit, that you can ask the credit card company to stop your credit transactions.

Credit cards definitely makes your life easier but at the cost of bigger bills but you can take a smart way out by being observant and noting each of your daily transactions happening through credit cards. Make sure that you tab your expenses and spend only that much what you can pay.