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Advantages and Disadvantages of Credit Cards

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Introduction

´╗┐Jingzhen Huang Personal finance 12/13/2012 Advantages and Disadvantages of Credit Cards Have you sees the movie Mixed Out? This movie is so realistic and close to our daily life. It describes how people abuse their credit card and fall into a debt crisis without being able to pay off. In our daily life, credit cards have become a popular payment method in many businesses, such as when we to shop in different stores and buy food in restaurants. Indeed, the credit card has been used by most of people in the world. This piece of plastic is easy to carry anywhere and useful for buying anything without paying cash. Thus, credit cards have become a most convenient form of payment for almost everything. However, using the credit card not only has advantage, but also disadvantages that will be also discussed in this essay. How does credit card affect our daily life? We have to learn how to use the credit card wisely in order to prevent debt crisis. ...read more.

Middle

In this case, you will get the points by using your credit card, and then receive the rewards after reaching a certain point. Moreover, there are not only advantages, but also disadvantages to using credit cards. Sometimes, credit cards might cause huge problems to individuals. For instance, credit cards entail high interest rates. Many people use their credit cards without feeling that they are spending money because the money is not being taken right away out of their pocket. In addition, they don?t how much exactly they spent until they get their monthly statement at the end of month. The problem is even increased if they forget to pay the bill on time. This is the credit card company will charge high interest fees or late fees that sometimes can reach to more than 25 dollars. Also, if people just pay their minimum payment every month this means that they just paid their interest, not the principal amount to begin with they used. In this way, they will have less budget flexibility in the future because their part of take-home money already used in the past. ...read more.

Conclusion

As a college student, I learn the lesson from my personal finance how to use the credit card wisely. The chapter tells all the cardholders be aware of the credit card. If you do not have enough money, do not use or purchase things that exceed your budget with your credit card. Generally, people who have a lot of credit cards should not have them because they do not have enough money to pay off the principle or sometimes cannot payoff minimum payment. They are stuck with extra fees and interest penalties. After you use your credit card, you have to pay off your bill every month. It is so simple and easy to get rid of interest, and this extra money you paid that you can get something else. As cardholders, it is really important for us to know to purchase within our budget, and do not exceed our own limit. Having a credit card not a bad idea, it is depend on how your use your card. If everyone knows all the knowledge about credit card, it will not bring out so many problems to you no matter how many cards you have. ...read more.

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