Credit cards are often seen by many as a sign that you are doing well for yourself and you can purchase or pay for the things you need or want. The more credit cards you have, the more items and services you can acquire now and pay for later. It is also seen by some as a great alternative to cash since they are easier to carry and they can be used almost everywhere.
However, even though you can get the services and goods you want with a credit card, a headache would certainly develop once you get the bill for your card. You would notice that your bill is higher than you expected and even if you can pay for it later, the amount you pay for increases.
If you do have more than one credit card, you have to contend with paying those bills as well and the extra fees included in it.
Considering this fact, should you still get more credit cards or not?
Pros of having credit cards
- Opens more doors to purchase goods: Like cash, credit cards enable you to purchase things, especially in places where only credit cards can be used. It would also help you purchase items securely, especially those that would normally need you to bring large amounts of cash to pay for them.
- Secured purchases: Unlike cash where you can miss an amount or two because you do not have a record of your expenses, credit cards come with a regular statement record that highlights where you used the card and when. They also come with certain features that would protect you should in case you lose the card or damage it. Some cards may even offer insurances for large purchases so you do not have to worry if they get damaged.
- Discounts and deals: Some credit cards today come with various perks for cardholders to help them get more for what they pay for. Some cards come with discounts for certain items or services if you use it for a particular store or restaurant. Others come with rewards points that would give you freebies and special deals when you reach a certain number of points.
- Develop your Credit Line: If you are hoping to keep your credit line in the green, making regular payments with your credit card and using it properly would help you build your credit history.
- Emergency Use: If you do not have cash with you, you can use it to pay for emergencies which would require you to pay for large purchases or lost goods due to the emergency.
Cons of having credit cards
- Causes you to shop for more – The biggest disadvantage a credit card has is causing you to purchase more than what your budget has and pay for. Since you do not need to pay your credit card’s balance in full every month, you can still purchase expensive items with it. Unfortunately, the more you hold off paying the money in full, the more fees you need to pay for each month.
- High-interest rates – Another setback presented by credit cards is their high-interest rate, which is added to your balance each month. The more you do not pay your balance each month, the more your bill increases because of the interest charge.
- Credit card fraud – With the advancement of technology today, credit cards can be stolen. As a result, you may end up getting a bill with items you didn’t pay for and have to pay for unless you want your credit history to be tarnished. However, this can be prevented if you immediately report it to your bank that you lost your card. When you do report it immediately, the credit card company will not charge you for the items purchased without your consent. They would also freeze your account if you make a sudden large purchase without informing them first.
What’s your alternative?
If you do want to have some cash with you for your sudden expenses or to pay your current bills, you can always just go avail a personal loan from a moneylender. Like a credit card, a personal loan from a moneylender can easily be availed once your application gets approved. The money you can borrow is also dependent on your needs, and like credit cards, you can use them immediately.
However, unlike credit cards, personal loans are easier to apply for and pay for. With credit cards, you would need to have a sterling financial background which proves your capacity to pay your bills every month. On the other hand, personal loans can be received almost immediately after you apply. You can also avail it even if you do not have a perfect financial history.
In terms of paying, credit cards come with a high-interest rate monthly which can be very tricky to pay for and can be quite high if you are not finished paying off the money you used. On the other hand, personal loans have lower interest rates which remain constant every month. You also do not have to worry about paying for it immediately as standard personal loans are payable within 5 years or more depending on your contract. The money you need to pay for your loans is also pre-determined depending on your contract.
Personal loans are also more flexible because moneylenders can adjust your loan contract depending on your paying capacity and preferences. If you are having troubles paying your loans, you can contact your moneylender and ask for a reprieve so they can adjust your payment terms.
Owning a credit card should not be seen as a bad thing considering the dangers it presents to users. It can still be a good item to use when you need cash for emergencies and if you want to build your credit history. Just remember to be responsible each time you use it, take note of your budget and pay it off your balances regularly to avoid penalties!