The Credit card – A Few Merits & Demerits

Like any other thing, the credit card also has a number of merits and demerits. A brief account of these merits and demerits can assist an individual making decision whether to go with such cards or not.

Merits of Credit card

Let us have a quick look over a few prominent features and merits of using these cards.

Increased Purchasing Power

The use of this card allows an individual to buy more than his purchasing power with the facility of instant advance. The feature is immensely useful for those who cannot afford to keep a large cash amount every time. Keeping a card in your pocket is much safer as compared to that of cash.

Purchase Protection

The card allows an individual some additional safety. If an item bought by a person is lost or stolen, he has evidence in the form of card slip. Similarly, if you have lost the original slip of purchases, the card slip can be used as an alternative.

Credit Line Building

The building of good advance history is very useful especially from a businessperson’s point of view. The good history of credit can enable an individual to get loans for car, house or other items. The card is the best source of building a good credit line.

Insurance

A number of financial institutions are offering the facility of cheap insurance policy to their loan cardholders. A person can save much of his time in finding an appropriate insurance policy. Similarly, you are also able to make payment for an insurance policy with your credit card. This was a brief account of making use of loan cards.

Demerits of Credit card

Now let us have a quick look over a few disadvantages or demerits of using these cards.

 Increased Budget

The main purpose of these cards is to involve people to make expenditures when they are short of cash that is you may spend $500 and above even if you are having just $100 in your pocket. This habit of spending more than your budget is not good as you are liable to pay back that amount along with interest.

High Rates of Interest

 The cardholder is charged with high interest rates on a balance that remains unpaid at the month’s end. This is how most of the people indulge in high debts or even insolvency.   

Frauds & Scams

Another dilemma is that there are numerous frauds and scams are associated with the use of these cards. In case of pin code leakage, you may easily lose much of your cash without being familiar. Similarly, steeling of such cards is also quite common. However, you may abstain this risk by reporting your card company immediately as you get informed that your card has been stolen. Similarly, ensure checking the statement at the end of each month thoroughly and report your card company in case of any unfamiliar charges. Similarly, you may also take assistance from personal security course.