Credit Cards as a Financial Tool
I always insist that you stay away from credit cards. Although they have their advantages, the possibility that they give of borrowing with a lot of ease can sink the personal finances of anyone if they are not very careful.
Credit cards are not for everyone. It is a tool that well used can bring you many advantages but that misused will make you fall into the arms of debt almost without realizing it .
In this article we will see some of the advantages and disadvantages that a credit card can give you.
Advantages of Credit Cards
If you use your credit card for small and regular purchases, such as shopping at the supermarket, when you add gas and so on, and make full payments at the end of the month, you get two advantages:
- Take advantage of card discounts on your purchases.
- Have more money in your account . Which means that money can be used for other expenses or get extra performance during that month.
Using a card also makes it much easier to keep track of your expenses . Every expense you make with the card is reflected in the statement so you don’t have to write down all your expenses manually.
This is great. Because everything that facilitates and eliminates barriers to keep your expenses controlled is a very positive point.
However, this point is not exclusive to credit cards. Debit cards also give you this advantage.
Another important positive point is that credit cards have associated insurance , free of charge, that is, at no additional cost.
Some of these insurances are:
- Medical assistance
- Lost luggage
Disadvantages of Credit Cards
However, credit cards also have their disadvantages.
The biggest drawback is that it is very easy for you to live above your means with such a card. It is easy to borrow with a credit card and the interests are brutal, around 18% -25%.
Paying for things with a credit card is an easy habit to take and difficult to eliminate.
It is relatively easy to use the credit card for something you want now and then make your “future self” pay for it.
Avoid these temptations and if you are not sure you can do it, do not have credit cards.
A second drawback is that at the end of the month you must have enough money to pay everything spent with the card during the current month.
Normally monthly expenses vary from month to month. This means that if during a month you have the normal expenses there is no problem but if a month there is some extra expense and you have not had it in mind, there will be less money in the account and therefore there will be part of the card expenses that do not Pay that month.
The remaining balance will be paid the following month but with interest. Those marked by the card that as we have seen are not exactly low. Recall that they range between 18% -25%, in most cases.
Therefore, it is necessary to be very careful with this point. On the one hand, as we saw credit cards allow us a better control of expenses but, at the same time, it is necessary that you also be much more attentive to them.
Is it really worth a credit card? In general, like any tool, if you know how to use the advantages well, they are really good :
- Better control of expenses
- More time with money in your account
- Discounts on purchases
- Free insurance
However, its disadvantages cannot be neglected . The possibility of borrowing very easily must be taken into account. I insist, if you are not sure of enduring temptation you better not have any credit card.
Why do I recommend, in general, not to have credit cards? Because most people can’t stand temptation and end up falling sooner or later. I don’t have a credit card myself.
And we are human and although we strive it is really difficult to always beat advertising and consumerism. With only one time you falter, you have already fallen into debt.