Credit Card advantages and their disadvantages are without bounds. Here, we will be disclosing some of the benefits and demerits associated with your card.
Understanding your Credit Cards
Depending on your financial institution or credit card types, you need to understand what a credit card is before we talk about the advantages and disadvantages.
One of our associate writers did a great work elaborating what a credit card is here.
Now, i believe you have a better understanding of what that little piece of plastic in your hands really means.
It is your financial institution in your pocket as it gives you access to purchase and use credits that are not easily available to you with the intents of paying back depending on the plan.
Credit Card Advantages
Below, we have outlined some benefits and advantages of having a credit card. These benefits and advantages differs based on the type of card you use.
- Fringe Benefits – Your card comes with some fringe benefits that you may not be aware of. Most banks and financial institutions that issues credit cards have affiliations with TAXI platforms, Hotels etc that offers rewards for services and discounts where applicable.
These will be of great benefits whereby you need an extra discounts. Imagine booking for a flight and get a TAXI discount at the end of the flight alongside a soothing SPA in a luxury hotel.
- Increases Spending Power – Your Card can actually increase your spending power. This is a great credit card advantages!
Since your credit is a short term loan, it gives you access to tap into the extra funds that in-turns increases your spending power!
- Less Risk – The risk associated with your credit cards are quite limited as they are not often linked with your Savings nor Current Account. This is one of the credit card advantages you need to be familiar with.
This is also similar to a utility card that gets funded only when needed. To show you how secure a credit card advantages could be, some institutions accepts full liabilities for any unauthorized usage of your card.
- Transfer between cards – You can actually transfer funds between your credit cards which will also boost Interest rates that accrues to the receiving card.
Credit Card Disadvantages
- Accrues Interest Charges – Like all credit cards, it is bound to accrues interest charges which you must payoff over a short period of time.
To those who are not familiar with the way these cards and the interest rates works, you might find these interest charges not-so-funny to keep up with.
- Short Term Loan – You should understand that, your credit is a short term loan that must be paid back depending on the duration of your institution.
As such, like all short term loans, you must develop a plan to have these credits paid back without any lingering. These will boost your credit card advantages and thus increase your credit worthiness.