Advantages and Disadvantages of Credit Cards

A credit card in simple words is a plastic card which can be used as substitute for cash. It is widely used by people for make payment whether it is a small sum involving buying a movie ticket or big sum like purchasing some furniture or payment at hospitals. Let’s look at some of the advantages and disadvantages of credit cards –

Advantages of Credit Cards

1. First and foremost advantage of credit card is that individual does not have to carry cash with him or her all the time as it is acceptable at all places and therefore it reduces the need for carrying cash.

2. Credit cards companies offer additional benefits such as additional insurance cover on purchases, cash back etc… which can be an additional benefit for the individuals who make credit purchases frequently.

3. Since credit cards allows one to buy now and pay later it gives a lot of flexibility to the buyer when there is festival season and buyer needs more money to buy the goods.

Disadvantages of Credit Cards

1. Due to credit card people tend to overspend and they end up buying those goods which they do not really require and therefore person using credit cards should keep this thing in mind that credit card does not give goods or services for free but they only delay the payment.

2. If a person is not able to repay the credit card installment then it will lead to trouble for him or her as interest rate on credit card is much higher than interest rate normal loan or borrowing.

3. Credit cards are more prone to fraud or theft and therefore person should keep this thing in mind before using the credit card.