Introduction.
Hello everyone today I’m going to discuss and review credit card’s benefits and disadvantages, Credit is a very useful financial tool if you use it properly with a proper understanding of the pros and cons, nowadays it become fashion for those who want unnecessary shopping. Indeed it helps in your emergency but use it in the right way so I will discuss it in briefs in the below paragraph.
What is credit cards?
A credit card is a financial instrument issued by a bank on behalf of people who want to buy or sell anything, it helps customers to purchase goods and services and withdraw cash on credit. For example, if you don’t have money and you want to buy anything, you can use a credit card for payment and after some time you can pay back to the bank with interest (in some cases there is no interest needed to pay) as I explained above credit card is issued by the bank.
Advantages of credit card:
Convenience: A credit card as I said its a payment card and you can carry it with you while going somewhere and traveling you don’t need to keep cash, simple you can keep it in your wallet and wherever you do some shopping or any expenses simple this plastic card can play a very important role for the transaction as we know that no one wants to keep cash in wallets, so it’s simple and convenient to use anywhere.
Reward: Reward points you can redeem but you have to use it and reward id you can easily redeem it while shopping and online shopping for tickets and airport lounge and it play an important role when you use it properly and it gives more reward points.
Cash Backs and discounts: If you use any best credit cards so you can get cash back and discounts and you can use it while doing some online shopping and also earn some reward when you use it for shopping and it helps to various offline and online merchants.
Interest-free credit: Many credits provide a facility for interest-free credit for up to 45 days, lets say you buy something today and you have to pay it back to the bank within 45 days so the user can not pay any interest rate on a credit card for 45 days.
Recharges and tickets: While doing recharge of dish TV, mobile phone, electricity bill, etc it helps the user and makes it convenient, credit cards are also use full tool for ticketing such as airfare, railway ticket and some time users get cash back and rewards while doing all this thing.
Credit score: Credit cards also play a very important role and help to user to maintain their credit score if you pay timely to the bank without delay so it boosts credit scores and there will be a higher chance to get more loans and credit cards in the future.
Disadvantages of credit cards:
Overspending: Overspending can trap you in debt because if you do not know your purchasing limit credit card is not for you so if you want to use it effectively you must use a very carefully and then you can reap its benefits.
High-Interest Charges: When you don’t use it properly without any attention it becomes a path of debt trap several companies offer you, lured you to take their credit card but before getting you must read and study very carefully the pros and cons of the credit card what will be annual charges and interest rate and so on.
Additional Expenses: As I said earlier you must read and study very carefully the hidden charges such as foreign transaction charges, annual charges, credit card fees, charges on cash withdrawals etc.
Minimum Due: At the top of the credit card statement is mentioned minimum due amount, the new one credit holder does not pay full payment and they think their credit card due is low but eventually, they end up with high amount of credit card payment. So everyone should pay attention to study the credit card statement thoroughly.
How to use credit cards effectively.
While taking it, using it credit card helps and gives you comfort but most users end up with high debt, and day by day they become debt trap and eventually their credit card becomes defaulter because they did not pay their credit card bills timely and banks.
Today, many big users use credit cards to build civil scores, earn rewards, and use cash back and discounts for payment. If you frequently travel, do online transactions, shop, etc., credit helps in many ways.
But every user should keep this in mind while using a credit card timely pay the bill to the credit card issuer (bank) otherwise, eventually, the user will end up paying a high interest rate, and they can be stuck in debt trap.
Conclusion:
Credit card is a plastic payment financial tool if used it properly it will give you great help and timely you should pay your credit card bill and build a high cibil score because if your credit score will not be good so you will not able to get more loan option and credit card in future. Use it effectively while doing online transactions, off line shopping and enjoy rewards, cash back and discounts.