Advantages and disadvantages of credit cardsThese are the advantages:
- Credit cards are a convenient means of payment. You don't have to carry cash around and don't need an ATM.
- Credit cards can help you with your bookkeeping. The monthly statements that are sent to you give you an overview of the expenses. Some cards offer a summary at the end of the year. This can, for example, save time with the tax return. The statements are also good proof of a purchase, if you have to prove this, for example, for an insurance policy.
- In the best case you really have "credit", since the money for a purchase is only debited from your account after a few weeks. Credit cards can be very useful in emergencies.
- Another advantage of credit cards are offers such as frequent flyer miles, discounts on rental cars etc.. Collect points that you can then redeem.
- Especially when travelling, they simply pay. In some countries, such as the USA, you must have a credit card.
- Many online shops allow payment by credit card only.
- Many credit card companies advertise with low introductory interest rates. You may be able to use these offers to temporarily offset loans for which you are paying higher interest.
- You can generally withdraw money from ATMs abroad with a credit card. But compare the fees before. Maybe the EC card is cheaper.
- If your credit card is stolen and you immediately report it to the credit card company, you will not have to pay for the purchases made by someone else. If you had cash, you'd be stuck.
- In the case of vanity, your wallet does not show :-). The weight of a credit card is only 2.3 grams. With 20 Euro small change on the other hand, These is some weight and volume and bulkiness that comes with it.
The use of credit cards also has these disadvantages:
- The biggest disadvantage of using credit cards is that they make it easy for you to live beyond your means: buy now, pay later. Don't spend money you don't have.
- There is nothing for free: a big disadvantage is the often-high debt interest rates and the annual fees that arise in owning a credit card. They often outweigh the benefits received. Also, sometimes commissions that the seller has to pay to the credit card company are added to the purchase price. If you need cash, you will typically be asked to pay 2% - 4% in fees.
- The result is paperwork that you may not even want: Because you should already check your accounts at the end of the month.
- If you fall into the red, the resulting interest will make your purchases even more expensive.
- Lock offers - Low interest rates can be an attractive option, but they are always for a limited time only. After that, the interest rate can rise dramatically.
- Never rely solely on your credit card: Even vending machines weaken and then nothing works anymore. You can also not pay in all shops with credit card.
- Another major disadvantage is that credit card numbers can be stolen and misused on the Internet.