Credit cards can be incredibly helpful, as well as hazardous. Its benefits and disadvantages depending on credit card usage. Credit cards are often abused through overspending and interest charges due to the lack of knowledge. Customers can avoid credit card abuse by using it responsibly.
Here are five things for you to keep in mind before you get yourself a credit card:
1. You can build or damage your credit score with credit cards
Customers can build a credit score with the help of their credit cards. A good credit score can help you get future loans quickly. However, your credit score can get damaged if you miss a payment. This will cause problems for your next credit applications.
2. They have expensive fees that can grow exponentially if you miss payments
Credit cards allow its customers to pay for shopping, bills, and other services without having to worry about cash or bank balance. However, credit cardholders have to pay a large amount of money in the shape of fees, payments, and APRs (Annual Percentage Rate). If a customer misses one monthly payment, they may have a large sum of fees to pay.
3. Borrowing money from credit cards reduce your future money
Credit cards provide their customers to have emergency purchasing power. If a person loses their job or has some other kind of financial crisis, they can borrow money from their credit card. However, they will have to pay an amount with interest that would be more than what they borrowed. This payment of the previous fee with interest will reduce their future money.
4. Credit cards offer better protection
Since identity thefts and frauds related to money have become more common than they used to be. Credit cards offer better protection against such incidents than cash or debit cards can. This is because customers can only take a limited amount of money from their credit cards. Hence, you will not lose more than on average Rs. 50,000, even if your credit card is stolen or misplaced.
5. Credit cardholders should fight their temptation to fight
It gets difficult for credit cardholders to not spend more than a limited amount of money from their credit cards. This is because it is easy to consume. When spending money from credit cards, people often do not realize that they will have to pay it back with interest.
What do you think about these five things to keep in mind before you get yourself a credit card? Let us know in the comments below.
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