Many people often complain about their credit cards due to suspicious charges, high interest rates, and never-ending bills sent by the company. Such a scenario is not uncommon if one fails to choose a suitable card for him. There are various types of credit cards available. Among them, some are interest-free, while others may charge a good amount of interest.
However, increasing credit score, earning reward points, cash backs and solving emergency fund requirements are notable benefits that a cardholder can enjoy. On the other hand, it is also not undeniable that people have also experienced many disadvantages while using credit card as a mode of payment.
Here we will discuss some advantages and disadvantages of holding credit card.
When a person is well aware of proper usage of credit card only, he will enjoy all the possible benefits.
- Helps to enhance credit score: Whether you have a bad credit score due to borrowing provident loans in Ireland your score is not up to the mark because of never applied for any loan, all can be amended by using a credit card. Whenever you have a credit card and make payment with it, the possibility of an increased credit score will become higher. Timely repayment of dues helps to enhance the score.
- Helps to make more money: Yes, the credit card can be a medium of earning more money. By using a reward points card, a user can collect gifts, cashbacks, coupons etc. Actually, reward point cards are specially designed for customers who like to earn extra money even while borrowing. These reward points can be turned into cash after redemption. Therefore, you can enjoy extra cash on every swipe.
- Helps to protect from fraudulent activity: Although there is a myth that if you lost the card, then fraudsters can make use of it by making payment. In fear of such a myth, many people avoid the concept of a credit card. It is not at all true. Instead, credit card users are considered as less fraudulent activity.
Nowadays, credit card companies used enhanced security protection to safeguard the user from fraudulent activities. Moreover, the entire process of buying is completely password-protected, and if you find out any unusual charges against your card, it is straightforward to raise a query. Besides, as per the government law, every credit card company needs to set a limit up to which any fraudulent borrowing can be compensated.
- Helps to move cashless: Whether you have a debit card, even then, the whole process of payment depends upon the availability of liquid fund in your account. However, with a credit card, there is no worry about how much money you have in the bank account because there is no need for instant payment. Credit Card Company will pay the entire bill amount on behalf of you. Therefore, enjoy the true essence of cashless.
Even after many attractive benefits, it is not all about only earning bonuses and coupons. Instead, improper usage can lead you towards increasing debt and put your family into a severe financial crisis.
- Leads towards over expenditure: Selecting credit card as the medium of payment provides ease of expenditure. Although it may sound really beneficial, it may increase the amount of debt at any time. As a cardholder needs not to pay instantly and his bank account balance remains the same so the possibility of purchasing high priced commodities will increase. When the cardholder is unable to repay every month, then starts the problem.
- Increases debt amount: Though it is mentioned in every advertisement that credit card provides the facility of moving cashless, this is not the ultimate truth. Actually, the truth is beyond it. When a cardholder uses a credit card as the mode of payment, it will actually increase the debt amount. Remember, the company is paying on behalf of the cardholder, which is too not for a lifetime. The amount should be paid back to the company. Therefore, it is like borrowing money from the lender. Over expense always leads towards increasing debt.
- Extra charges and add on interest: Another thing associated with a credit card is charged. Some credit card companies ask for monthly charges, while many ask for yearly costs from a cardholder. Besides, when a person would like to repay the borrowing amount for a long time, then he needs to pay extra money in the form of interest. This is painful, and sometimes, the borrowing amount surpluses the total repaid amount. For this reason, many cardholders who experienced such extra payment used to avoid it.
- Increases negative score: Although credit card companies may show you the benefit of improving your credit score, chances are affecting the credit score. If you are unable to regular repayment, then it may impact the score. As a result, instead of enhancing your credit score, you may possess a negative score.