economics

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What are the advantages and disadvantages of using a credit card?

The good:
Don't need to cary cash.
Can buy needed goods on credit when you otherwise wouldn't be able to.

The bad:
Usually you pay high interest until the balance is zero. Most people are in debt up to their eyeballs.


The ugly:
Credit cards, Cell phones, etc are the bane of mankind.


You need to think about what you would do with a credit card that you can't without it (advantages). Also, consider people who misuse credit cards (disadvantages).

Ask yourself what you would be willing to pay for an item if you had to hand out actual cash. Would there be a difference if you just had to hand over your credit card? When you have a wallet filled with cash, you have a finite amount. You have a finite amount with a credit card, too, but it's more difficult to remember that limit. When your cash is gone, you stop spending, but when you reach that same amount on a credit card, do you stop spending?

Ask yourself what would happen if you kept paying only the minimum amount listed on the statement. Remember to check the interest percentage charged. Say you spend $100 by credit card. You pay $10 the first month. If you don't charge anything else,you'll have that paid off in ten months, right? Wrong!

To me, one advantage is that I have a better chance of getting my money back if there is a problem. The credit card company has more clout than I do. Another is the detailed listing of charges. Speed is a factor, too. I can buy something online without having to send a check by snail mail.

The disadvantages are caused mainly by misuse.

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