What do you think are some advantages and disadvantages that come with owning a credit card?

The joy of buying something on the spot just by swiping your plastic comes with pros and cons.

Being able to afford almost anything if you keep one in your wallet gives you certain advantages, but side effects for misuse of your credit card can be devastating.

Personally, I’m one of those ‘weirdos’ who still refuses to apply for a credit card!

Actually, my bank offered me one just a few months ago, for free. To their surprise, I politely declined.

As an adult, I’m not afraid of the boogeyman anymore, but credit card debt is still one heck of a scare.

However, there are certain advantages that come with being a credit card frequent user.

Do the pros trump the cons?

You decide!

Advantages and disadvantages that come with owning a credit card

Advantages of using a credit card

Credit cards help build credit score

This is probably the biggest long term perk to owning a credit card: it helps build and improve your credit score.

The better your credit score, the lower interest rates you’d have to pay if you apply for a loan, the better chances you’ll have to land a new job or be approved to rent a new place.

If you use your credit card wisely and pay it off each month, you’ll be living proof you’re a responsible adult able to handle your money correctly.

This helps a lot in the long run!

Immediate purchases

Say you have a very important business dinner, but nothing to wear.

Having a credit card could help you buy a new suit immediately, and pay later.

Credit cards are great for buying stuff on the spot and paying for it later on, in case of an emergency.

Emergency funds at your service

Not everyone has an emergency fund available, so having a credit card is definitely helpful if you need to pay for something right away (car repairs, a medical emergency, etc.).

Unexpected emergencies occur when you least expect it, so having a credit card available can definitely help.

Of course, everyone should start building an emergency fund as soon as possible, but knowing you have a safety net meanwhile can help.

Credit card rewards

Most credit cards come with amazing rewards!

Cash back, travel incentives, you name it!

Knowing you’ll get a nice reward after spending money is a nice feeling.

You’re probably going to spend money on stuff anyway, so why not take advantage and get something in return?

Credit cards can do that for you.

You can use a credit card almost anywhere

Need to book a room online? Or have funds available when you travel abroad?

Credit cards can be used basically anywhere.

Overseas, online, you can even make purchases over the phone.

You can’t do that with cash, so it’s advantageous to own a credit card if you’re a frequent online buyer or world traveler.

Disadvantages of using a credit card

Credit cards can ruin your credit score

Using a credit card wisely can help build credit score.

However! Make a few mistakes and you could see your credit score go belly-up.

Having too many credit cards or carrying a high balance can negatively affect your FICO score.

This leads to higher interest fees if you ever need a loan, and that’s IF you get approved.

Credit score could take months to repair, so ‘destroying’ it is never a good idea.

Credit card debt

Falling into a spending trap is so easy! And credit card debt is difficult to pay off if you’re not careful.

There are so many credit card mistakes that could ruin your financial stability, it’s always better to just avoid them altogether if possible!

Overspending

Credit card debt or not, overspending is always a bad idea.

Even if you pay your monthly balance in full, spending more than you should could lead to a serious imbalance in your budget!

Overspending is also often caused by the need to use your rewards!

People often feel tempted to spend more than they need to just to get their hands on those credit card rewards.

The rewards might be great, but it’s not wise to ‘hurt’ your budget just for a few perks!

Hidden costs

Did you really read everything in your contract?

Even the fine print?

There are many hidden costs that you’re probably not aware of.

Or maybe you know they exist and think “Yeah right! You’ll never trick me!“.

But what if one month you simply forget to pay your bill or are only able to pay it a few days later than it was due?

Hidden costs might be small, but they can definitely add up.

False sense of available funds

So you’re glad you can buy now and pay later.

While this is a great perk, sometimes it’s difficult to keep track of the exact amount of funds available!

Credit card funds are NOT available funds.

The money you’re allowed to spend is not really yours to begin with! This is something many credit card owners often forget.

Knowing you can rely on a safety net is nice, but how much money do you have available, for real?
What if you get into debt without even knowing it?
What if you forget about some of the insignificant purchases from last week, and think you can still swipe your credit card without any risks?

For some, credit card can be a great tool. For others, it can lead to some serious money problems.

It’s up to every individual to decide whether or not it’s worth applying for a credit card.

Do you own a credit card or do you prefer to stay away from spending temptations?
What other advantages or disadvantages of using a credit card can you think of?