Credit cards are a very common payment method in today’s modern world. Pretty much everyone has one, and for good reason. But why have credit cards become such an integral part of the day-to-day financial world? What advantages do they have that have made them so common? And do they have any disadvantages? Through MaxCash, you’re about to learn the answer to these questions and more.
The Advantages of Credit Cards
Let’s start with why credit cards are such a commonality of today’s financial world: the benefits. You may already be aware of some credit card benefits, but you might find that some of these perks were ones you never even knew about.
Did you know you can get a brand new credit card through MaxCash? Check out the page on credit cards to find out more! With that in mind, some of the advantages of credit cards include:
- Increased Purchasing Ability – This is a modern benefit of credit cards. Credit cards allow you to make purchase on different sources, like over the phone or online. Without credit cards, you’re generally not going to be able to make purchases via these methods, pretty much limiting you to only in-person purchases.
- Ease of Use – Using cash or a check can be a little lengthy and inconvenient. Cash is a hassle to carry around, especially if whoever you’re doing business with has to provide you with change for the transaction. And checks are very inefficient, time-wise. But credit cards are a very simple one-and-done process. With just one swipe, your transaction is complete, making it the most efficient method of exchanging funds.
- Installment Payments – Unlike many other payment types, you’re able to pay off the amount you owe on credit cards in installments. If you try to pay off other types of large payments in slow, gradual installments, you generally won’t be allowed to do so. Credit cards allow you to pay off your balance slowly. This means that you can deal with a large payment over time instead of having to pay it all in full up front.
- Credit Generation – Other payment methods don’t allow you to build up your credit score, but with credit cards you can do so very easily. So long as you keep up with regular payments and avoid being late, you’ll be able to build your credit score rather quickly. Doing this will end up making other types of transactions that look into your credit score easier.
- Emergency Spending – It’s not always the best plan, but the versatility of credit cards means that you can often use them to make payments for unexpected costs in emergencies.
- Earning Rewards – Many modern credit cards come with systems that offer enticing rewards for continued and regular usage. The rewards for using your card can range from getting cash back after payments to physical objects you can redeem points for. These points often build up over time as well, allowing you to build them up for an even better deal.
- No Immediate Losses in Case of Identity Theft – If some unsavory individual manages to get a hold of your credit card, they may be able to make fraudulent purchases. However, you’ll have a much greater chance to catch them in the act and prevent the charge from going through than you would if they, say, got a hold of your checking account.
As you can see, the numerous benefits of credit cards, like their versatility and user-friendliness is what has led them to be an ordinary part of everyday life. These benefits are ones you can enjoy every day when you sign up for a credit card yourself.
The Disadvantages of Credit Cards
There are notable drawbacks to the usage of credit cards as well. Just like the advantages, some of these drawbacks are rather obvious to anyone who’s used a credit card in the past, but there are also some you’re likely not aware of. If you practice smart usage of your card, you can avoid many of these issues. Knowing that, here’s some of the disadvantages of credit cards:
- Allure of Spending – The ability to spend beyond your means with a credit card can result in the rather unfortunate temptation to do exactly that. Because credit cards can seem like free money, they can lead to people spending far more than they can truly afford. This can lead to people falling into more debt than they can handle due to improper spending with the card. Keep your spending reigned in and you can avoid this pitfall.
- Reduction of Income – Spending on your credit card only to pay it off later may seem like an attractive feature, but there’s a hidden downside to this plan of action as well. Every charge on your credit ends up cutting into your long-term income. Essentially, the amount spent on your credit card is a foregone reduction of how much money you’re going to be earning.
- Confusing Contracts – If you’re inexperienced with credit card terms, some of the common phrases and terms can seem like a completely different language. Learning the ins-and-outs of the terminology is always helpful. It can prevent you from making some drastic mistakes with your card and help make the world of credit cards easier to navigate.
- Potential Fraud – Though credit card fraud is easier to catch than other types of fraud, having a credit card at all makes you vulnerable. If you don’t pay close attention to statements and charges, the fraudster can get away with it too. Always double check your charges so you can catch them in the act and keep your card secure.
- Credit Score Dangers – Much like how proper usage of your credit card can increase your credit score, improper use can damage it. Paying your card late or running up enormous charges can seriously put a dent in your credit score, making it harder to put that credit score to use elsewhere. Always pay your card on time, and you won’t have to worry about a thing.
As you can see, there’s plenty of ways in which credit cards are great, and also plenty of ways in which they can end up falling short if you’re not careful. So long as you keep track of your spending and use your card properly, it can be a great tool.
With the help of MaxCash and their handy tips, you can make sure you make the most of your card and reap all the potential rewards! Want to get started on a new credit card today? Contact MaxCash now to find out how you can get one!