Credit cards are payment instruments that facilitate economic activities such as shopping transactions and cash withdrawals.
The credit card issuer in this case is the bank will fulfill the obligation to pay the cardholder’s obligations first. Cardholders are obliged to pay off by paying at once or in installments.
Credit cards can be a tool that really helps you to make transactions easier as long as you use them wisely. Credit cards can also backfire if you are not careful in using them.
Self-control is very important when using a credit card. If not, you will get a fairly large bill on your credit card bill.
Credit Card Advantages
1. Pay later
One of the benefits of a credit card is that it allows you to buy or pay for something even when you don’t have cash, especially if you need it urgently.
You can pay credit card bills at the end of the specified period.
Try to pay it on time to keep your account reputation safe.
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2. Reward points
Many credit cards provide reward points for their users. These points are earned every time a user makes a transaction with a credit card.
In addition, many credit cards provide other promos, such as cashback and discounts.
This promo often occurs in the use of credit cards to buy airline tickets and hotels.
If you are able to use it well, a credit card will provide a large enough benefit for you.
3. Guaranteed safety
Another benefit of credit cards is the existence of a special security system.
If at any time you lose your credit card, the credit card company can hold transactions that other people may have made with your credit card.
Credit card companies can also notify you of suspicious transactions with your credit card.
4. Means of building a track record
You may need more than one credit card.
Therefore, you can build a good track record by paying credit according to the due maturity.
Quoted from Forbes, credit card companies usually provide info to credit reporting agencies if you want to create a new credit card.
One of the information provided is about your discipline in paying credit.
If you have a good track record, chances are you will be allowed to make another credit card.
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Disadvantages of Credit Cards
credit card advantages and disadvantages
1. Lots of extra fees
When using a credit card, there are several types of fees that you must pay to the company.
These costs can be larger than using other means of borrowing money.
Some of the costs include the annual percentage rate or annual interest percentage (APR), service fees, and penalties that you have to pay if you are late paying the loan.
If you can’t pay it, your debt will continue to grow and become a burden in the future.
2. Related to credit score
Credit score is something that can determine whether your loan application is accepted or not.
If you have a good credit score, you have the opportunity to open another credit card or make a loan.
The use of credit cards is closely related to credit scores.
Reporting from The Balance, every credit card user is late in paying, the credit score will drop.
A low credit score can be a problem when you really need something, but you can’t pay for it with a credit card.
3. Addicted to Debt
The benefit of a credit card is that it is easy to pay. However, this can make you feel comfortable going into debt.
Credit cards can make it difficult for you to control yourself to pay or buy something without having cash at the time. Many credit card users are stuck in this problem.
Therefore, if you really want to make good use of credit cards, you must strictly regulate yourself in the use and management of your finances.
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Using a credit card does require some considerations. If you feel financially stable, a credit card can be a good choice to achieve your financial plan.
The most important thing is that you can use credit cards wisely and responsibly.
With the advantages and disadvantages of credit cards that Glints has conveyed, you can determine whether you are ready to have a credit card.
If you are still confused, you can discuss with other users and even the experts on The Bank.
In this latest feature of the application, you can get insights about credit cards and other things you want to ask.