Credit card is a handy tool for getting money and cashless payment. However, its owner need to know not only advantages but also disadvantages when using.
Advantages of Credit Card
Credit card grace period can be called the most significant advantage of this card. An average of 50 to 60 days period time is available to use the bank money for free. And only after this period if the loan is not repaid, will have to pay for the funds in accordance with the applicable interest rate.
Another positive point is that you can use the credit limit not once but repeatedly. Just back debt – and as soon as you can put into circulation of new credit.
The client gets the card can safely use the loan at its sole discretion to pay for any purchases and services, withdraw cash, and all without having to report to the bank for purposes of the loan.
It is noteworthy that when paying for goods and services by credit card can save money. Banks actively launch co-branded projects with retail chains and large companies, allowing customers to get additional discounts.
Some credit cards are endowed with a very reasonable feature called cash-back. It implies a certain percentage of the refund amount spent buying back at the owner’s expense.
And in the end all the pros of credit card can only add that no one forbids a person to issue cards under several different purposes. In this case, the customer will always have at hand the means for any occasions.
Disadvantages of Credit Card
All of these advantages, undoubtedly contribute to the continuous growth in demand for this bank product. But just consider them when making decisions about choosing the credit card is fundamentally wrong. As with any loan offer from credit cards have a number of drawbacks.
First, interest rates on credit cards are traditionally higher rates on consumer loans. The difference can be up to 5 or even 10 or 15 percentage points.
Secondly, for the issue and annual service fee in most cases have to pay a commission. Yes, and cash withdrawals at ATMs will incur additional costs in the form of the same commissions which may be up to a few percent of the amount of money taken. In addition, the grace period in the number of banks may not apply to cash withdrawals.
Third, credit cards must be used very carefully, fraud in this area has not been secure yet. Every year, thousands of law enforcement agencies identify crimes related to credit cards.
All these facts do not go to any comparison with the psychological aspects of the use of credit cards. These can be very easy to get used to, become dependent on them and did not even notice how the debt will exceed your financial opportunities.