The Good and the Bad Side of Credit Cards

Credit Card

Having a credit card is a big responsibility. Having more than one should require a gargantuan amount of self-control and discipline in using and managing them.

As with many things, there are many pros and cons to possessing a credit card.

The Good

  • Buy Now, Pay Later: Let’s say your fridge broke down and you need a new one. You can purchase a new refrigerator on staggered monthly payments without worrying about a sudden chunk being taken from your savings account. If you’re not the frequent splurging type, your credit card will definitely come in handy for emergencies or unforeseen events. As long as you don’t apply this benefit for impulsive purchases, this is marked under one of the benefits of having a credit card.
  • Still Be Able to Save: In line with the buy now pay later benefit, having a credit card allows you to continuously save up even if you’ve recently purchased an expensive item.
  • A Good Credit Score: Having good credit takes you a long way. This lets banks know that you can be responsible for the credit limit allowed you. If you prove to be good at handling your credit cards, then this gives them the confidence to award you with a higher credit limit and maybe even a loan, should you decide to apply for one.

The Bad

  • The Interest Rates: Missing one payment can set you off tens or hundreds of dollars, depending on the interest rate of your credit card for missed payments and the purchases you made.
  • The Debt: Call it whatever you want, but each swipe of the credit card is defined as a debt. Each swipe requires you to pay for the value you paid for, eventually. This is why whenever you use your credit card, you have to make sure you have the means to pay for your purchases, and a savings account with money to pay for the purchase just in case you lose your job. If you have cash, use that instead of your card, particularly for small purchases, because multiple small purchases can add up fast.
  • The Urge: You have a credit card you can use to buy now and pay off at a later date. The urge will always be there, particularly if you have a high credit limit and something you want badly. It can be the new iPhone X or a new pair of Yeezy. Having a credit card means having to consistently stop that urge you sometimes get to buy something new. This has led many impulse-buyers to debt or a bad credit score—you don’t want either of those two.
  • The Annual Fee: While there are many credit card companies who offer waived annual fees, there are still other types of credit cards that require annual fees to be paid. And depending on the type of credit card, these fees can be quite costly. The more credit cards you have, the higher annual fee in total you may need to pay. To avoid this, if you don’t want to pay annual fees, be sure to get a credit card with waived annual fees. Before accepting a credit card, ask about the annual fee and interest rates first.

Before applying for a credit card, remember the pros and cons to properly weigh your options.