Credit cards have become a trendy thing nowadays, and many people are joining this trend because of the simple and easy way that credit cards operate. Many young adults have started using credit cards in order to increase their credit scores so that they will enjoy the benefits and perks of having a high credit score in the future. However, using a credit card can have pros and cons, and in this article, we will discuss some of them.
Pros of Owning a Credit Card
1. An Easy Way to Build Credit
As many people know, using credit cards is one of the best ways to increase your credit score. You will be able to increase your credit score only if you have a good way of managing your finances. For example, if you pay your debts and taxes in time, you will be able to increase your credit score, which is an indication of your financial reputation. In other words, having a good credit score indicates that you have been responsible with your finances and have met every deadline. Click here to find the best credit repair companies.
2. Credit Cards Offer More Security
Many credit card owners use credit cards to make purchases even if they have cash with them. That is because credit cards offer security. For example, when there is a problem with a purchase that you made, and you return the product, but the company refuses to give you back your money, you will be able to contact your credit card issuer, and they will intervene in order to get you back your money.
3. Cash Backs
Many credit card issuers allow their customers some kinds of rewards in cash. Credit card issuers will reward people who have a good reputation for meeting deadlines and paying everything in time and will give them cashback. Using credit cards in a regular and constant manner will increase one’s chances of earning cashback. Even though owning a credit card can be costly, if they are used in the right way, the rewards you will receive for managing your finances in a good way will be more than the cost of owning a credit card.
4. Provides an Easy Way to Manage Finances
When people make purchases using their credit cards, all of the information will be registered and kept safe in a report. Credit card users will be able to easily access all of this information which can help them manage their finances, see how much they are spending, how much they need to save, how much money they should cut from their spending limit, and based on all of the information, they will be able to put a budget for themselves to manage and have a healthy financial reputation.
Cons of Owning a Credit Card
1. High Rates For Taking a Debt
Even though credit cards allow people to take debts based on their credit scores, they give these debts at high rates. Taking debts from credit cards is so easy that people do not understand how problematic it will be for them to pay back their debts in the future. And sometimes, people even miss the billing cycle because the amount of debt that they have taken from their credit cards does not meet their monthly incomes, and this will cause the interest to increase.
2. An Easy Way to Create Financial Problems
Credit cards allow people to borrow money based on their credit scores. So, when people are in desperate need of money, especially people who are in their twenties who may be struggling with their financial situations, take out loans from their credit cards without considering the effect that taking out this debt will have on them in the long run. This situation will create major financial problems in the future because people will have a lot of debts that do not align with their income.
Key Takeaways
Owning a credit card is an easy and safe way to keep track of your finances, and credit cards will help you in desperate situations when one is in need of an amount that you will not be able to get in quite some time. However, you should know and learn how to use credit cards in a way that will not cause you additional financial problems in the future. There are a lot more pros and cons to using a credit card, so, try doing some research to figure everything out and use credit cards in the right way.
