by Siya R
We all most likely have someone we know that has a credit card. You might even have one yourself. What are some benefits that you have if you have one? If you don’t have one, do you think you need one? People say that having a credit card is a good thing to have and some say it's a bad thing. Well I wanted to figure out which it is. Is it a good thing and does it help you or is it a bad thing and just makes you spend way more money? Here are a few pros and cons that I found.
Pros-
It’s Safer
When you get a credit card, it is safer than just carrying around cash. Let’s say that you lost your cash, there is a small chance that you will get it returned back to you, now with a credit card you can quickly cancel the card or there are some things where you can freeze the card. It’s also safer because it can be used as an emergency line of credit and just in times of crisis.
It Builds Your Credit Score
Your credit score is a really important thing in your life. Credit helps you to get the things you need now, like a loan for a car, based on your promise to pay later. Working to improve your credit helps ensure you'll qualify for loans when you need them. So when you use a credit card and keep it in good standing it will build your credit score, which can increase your chance of approval for other products.
Perks
A lot of credit cards have “perks”. Some “perks” when using a credit card are getting rewards points when you spend. Rewards credit cards let you earn reward points to redeem with the bank’s rewards programs for perks. Some other perks include travel insurance, purchase protection and extended warranty insurance. Another perk is that they work in any currency. Meaning that you can make purchases in foreign countries.
Cons-
Overspending
This is all dependent on you, the one who has the credit card. But with most people, overspending is an issue. People think that it's a buy now and don’t worry about it, but in reality you need to be paying the money back. People tend to not think about that and then they overspend and eventually get into debt and can’t pay it back.
Fees and Rates
Using a credit card for a cash withdrawal will take a cash advance fee worth about 3% of the total transaction amount. And when withdrawing it typically attracts an interest rate of 19-22%. You could also be paying fees for when you miss a payment, spend past your credit limit, overseas transactions, balance transfers, and reward program fees. Also your fees can be charged interest rates as well, so that could be added to the 19-22%.
Credit Card Fraud
Many credit card companies have fraud protection things set up so it doesn’t happen. But not all of them do. Either way protected or not, there is still the possibility of it happening. There are many fraud schemes that target credit cards. Fraud could also cause damage to your credit reports, if the fraud causes you to miss payments. And if you miss payments you would also get in dept.
Looking at just these pros and cons, I think it is a good investment to get your own credit card. But I think that only if you think you could handle it and not overspend and keep up with the fees and interest rates. It’s a big responsibility to get one and you have to know exactly what you are dealing with.
Works Cited
AICPA. "Credit Cards: The Pros and Cons." 360 Degrees of Financial Literacy, www.360financialliteracy.org/Topics/Credit-and-Debt/Credit-Cards-and-Reports/Credit-Cards-The-Pros-and-Cons.
"Disadvantages of Credit Cards." TheMint.org - Fun Financial Literacy Activities for Kids, Teens, Parents and Teachers, www.themint.org/teens/disadvantages-of-credit-cards.html.
Fuller, Adrienne. "15+ Advantages and Disadvantages of Using Credit Cards | Finder.com." Finder US, 27 Apr. 2020, www.finder.com/credit-cards-top-benefits-and-disadvantages.
"Pros and Cons of Credit Cards That Everyone Should Know." The Balance, www.thebalance.com/pros-and-cons-of-credit-cards-960222.
"Pros and Cons of Credit Cards." WalletHub, 11 Jan. 2019, wallethub.com/edu/cc/pros-and-cons-of-credit-cards/25830#fraud.
"What is Credit and Why is It Important?" My Great Lakes, mygreatlakes.org/educate/knowledge-center/credit.html.
I think that a lot of people don’t fully think about some of the drawbacks that you spoke about. Credit cards theoretically seem like they may be easy to manage and build a good credit score off of, but that is not always the case. I personally think that credit cards are super important for our future, as they do give banks a sense of our reliability, but I have never thought about fraud being such an issue, it is good to be aware. Do you know how often credit card fraud happens? Or what are some of the signs that it could be happening to you? Most importantly, how do we stop it as we notice it? This was a very informative article, nice job.
ReplyDeleteI thought that this blog was extremely helpful, and has really improved my understanding if Credit cards. But in order to truly see if credit is better than debit and answer your question. We need to also know the pros and cons of a debit card. I heard that you aren't able to have a credit card until you are 18. As well as to own a debit card, you have to be at least 16. Which means that most high school students will be using a debit card. For the future, I will find this information very valuable when I make my choice to go with a credit card or a debit card. Especially that it is safe and builds credit score. Which I hear is really good to have. Keep up the great work!
ReplyDeleteThis is was very informative and loved how you structured it. One I wanna know is why? In some of your cons statements and claims just claims as true fact no real evidence to help back this is the case. For example, credit card fraud. You claim it to be bad and targets credit cards, but how does that happen? And what's a helpful solution so a person doesn't overspend and max out their credit card? All in all, great piece.
ReplyDeleteI thought your blog was really interesting, I never considered a life where some people only pay in cash for everything, but from your pros and cons, I think buying a credit card is a better investment. In my experience, I don't have a tendency to overspend with cash, but I do have a tendency to buy something small with cash like candy or something and then forget about it unlike when I buy things with a credit card because the app that's connected with my card records everything I've bought. Also you said you get a better credit score when you use a credit card, and I agree, but another thing that is easier when you use a credit card is big payments such as buying a house or a mortgage or even just doing your taxes. Life would be so much harder without credit cards. Also I really liked your blog and thought it was really well-written, great job!
ReplyDeleteNot many people think about really any of the cons. Being able to write about the cons and showing them some of the bad things is important. I feel like many people just think they're cool with a credit card because not everyone has one. Some people and abuse the fact that they have one and start over spending and eventually they'll have to pay off thousands of dollars that they don't have at the moment which puts them into a deeper hole that they were already in. Yes there is pros to having a credit card like you listed, and I really appreciate the fact you were able to give us some informational content about the cons of having a credit card.
ReplyDeleteI liked how straight forward this blog was, and can be really informative for people considering of getting a credit cards. Personally, credit cards are really worth it. It's accessible at any time and is more efficient with purchases. However, this tends to make people get carried away with how much they're spending because the money isn't physically in front of them. Every point you brought up I felt like wasn't irrelevant at all and are the key factors for both pros and cons. It's really important to consider your cash involvement as well as everyone is different, and not everyone spends their money the same way. Overall, I found this to be a informative blog and really like the format of it. Great job!
ReplyDeleteThis was super helpful for me; as someone who was never fully taught the difference between a debit or a credit card, I can see how so many people, including myself at one point, couldn't differentiate between the two or even just the pros and cons of using a credit card. I do totally agree with what you said about overspending, I feel like it definitely is easier to do so with a credit card simply due to the fact that you can't actually see the money leaving your hand or your account. But being reminded by things like this is super helpful and important!
ReplyDeleteI thought your blog post was very helpful. It was nice to get a flat out pros and cons list of a credit card. Do you think that the fees and rates can change based on the type/brand of credit card you have?
ReplyDeleteSo what I found out about having a credit card is that it is much easier to keep money safe instead of having tons of money flying around in your wallet. Also what I found out was that the money you have in cash and if you lose it the chances of getting it back is very slim but if you have only your credit card on hand it is much easier to stop a payment transaction rather than losing tons of cash.
ReplyDeleteYour blog post was very helpful as I was actually thinking about getting a credit card in summer possibly and there is way more ways to pay when you have a credit card awesome job with picking this topic
ReplyDeleteA credit card is truly a double edged sword, you must properly use it to gain the full benefit. I think I'll have to get my own credit card soon because carrying a lot of cash around is risky and it is safer to pay for things than with a debit card as well. I'll be sure to pay on time though!
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