Advantages And Disadvantages Of Credit card payment

Advantages And Disadvantages Of Credit card payment

according to www.moneyadviceservice.org.uk, Credit cards are easy to carry, easy to use and are accepted at more places than charge cards and prepaid cards,

Here are some of the advantages and disadvantages:

  • Safer than cash: If your card is lost or stolen, just call your bank and cancel it. If it is stolen and used fraudulently, you are much more likely to get the money back.
  • Buy now, pay later: If you don’t have the cash you need till the next payday, or for a major purchase, a credit card gives you some extra financial wriggle room, though you should only use it if you are confident you can pay it back.
  • High interest payments: If you don’t clear your balance at the end of each month, you will have to pay interest on your outstanding balance. The interest rate on a credit card can be quite higher than for a personal loan, particularly for larger amounts.
  • Beware of the debt spiral: Miss just one payment and the interest will start to add up. Unless you pay off what was owed each month, you can quickly spiral into debt if you continue spending on your card.
  • Additional fees: As well as the interest, you can find yourself paying additional fees or penalties for exceeding your credit limit or missing a payment. There are also fees for using a cash machine, and some cards charge an annual or monthly fee on top.

Charges and fees

Be careful how you use your credit card. There are all kinds of ways you can incur charges.

  • Watch out for interest rates: If you don’t pay off your credit card balance at the end of the month, you will pay interest on the whole of the statement balance.
  • Late payments damage your credit rating: If you make your payment after the monthly deadline on your statement, you will have to pay a late payment charge.

If you use your credit card, you may pay a fee every time you take out cash and you may not be warned of the extra cost when you use the machine.


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