Nowadays, credit cards often seem like a rite of passage for financially independent people. That is especially true among young adults in the United States. There is no shortage of options to choose from when it comes to getting them. A credit card is a potentially beneficial option for people who want to make a necessary purchase but are short of money.
These cards are also helpful to those who want to get a small business enterprise off the ground. But before getting one, consider the pros and cons of having credit cards and the possibility of getting credit card bonus offers.
Should You Get a Credit Card?
Different types of credit cards play a significant role in spreading the cost of big purchases. They can also give you some perks, though they come with considerable risks. Hence, it is vital to determine whether a credit card is right for you. Some of the pros and cons of having credit cards include:
Advantage: Credit Cards Are a Great Way to Build Your Credit
Your credit history is a track record of your borrowing and paying habits. When you open a new credit card account, your lender will report your account’s activity to a credit reporting agency. The lending agency will also report your missed payments or frequent late installments.
Essentially, your credit history will determine your credit score. That measurement or score will help lenders know if you are a good candidate for a loan or credit card. It will also help determine your lending parameters. So, having a good credit score can positively affect your quality of life. It can help you meet your financial goals.
Advantage: Credit Cards Are Often More Secure Than Cash
People with a lot of money in the bank frequently use credit cards. That is because they add another level of security. If someone steals your credit card or when you lose it, your credit card company can put a hold on it to prevent fraudulent purchases. Furthermore, many credit card companies check for suspicious activities and notify users if something seems strange with the recent pattern of purchases.
Disadvantage: High Cost of Borrowing
Credit cards can be convenient, though using them tends to cost more than a traditional loan. Many come with high annual interest rates, penalties, and service fees for late payments. Such charges can quickly add up if you fail to pay off your balance as stipulated in the contract.
Disadvantage: You Can Dig Yourself Into a Hole
Getting a new credit card may give you access to more funds than you currently have. That can make it easy for people without the discipline to overspend. You might end up digging yourself into a financial hole and potentially damage your credit score.
There are many more pros and cons to having credit cards. Today, almost everyone needs to borrow to achieve various financial goals at some point. Credit cards can help you bridge the gap between your regular paychecks or pay for stuff you can repay over time. But before you apply for a credit card, you need to do your homework.