Thứ Tư, 21 tháng 8, 2013

The Disadvantages Of Credit Cards

The Disadvantages Of Credit Cards

Credit cards can truly be your savior especially on occasions that you do not have enough cash in your pockets to purchase an item that is badly needed. It can offer you the chance of buying a variety of items, materials, services and properties without having to pay for them at once. However having a credit card can also have its own disadvantages in the long run.

Cons OF having A Credit Card

Since credit cards are formed under certain terms and agreements that are laid out by their banks, it means that whatever non-fulfillment of such may entail you for consequences. The most common consequence is having a higher cost of payment especially if you do not pay on the specified time that the bank required you to. Furthermore, if you are late on your regular payments, it can cause you to have bad credit rating which in turn can lead to lower creditworthiness in the future. This means that in any event that you want to open another credit account, or perhaps issue a personal loan from another bank; it may give you a lower credit line. Since you already have a bad credit history with your current bank, then it may naturally imply that you do not have the proper resources to fund another account, and therefore all your bank applications rejected.

Overspending Tendencies

Aside from these, since having a credit card means that you can buy absolutely anything anywhere, it can lead to overspending. It can cause you to have a lot of debt in the future; a debt that is simply too expensive for you to handle. Since having a credit card gives you freedom to buy, it can lead you to be too impulsive and impractical in the things that you purchase. You then purchase on fancy instead on necessity.

Need For Budgeting

Having a huge debt is especially difficult if you are not efficient in regulating your finances or your resources. The same goes if you are not providing a certain percentage of your income to cover for your debt payments. In cases like this, it can give you serious problems in the future and things may even reach a legal process when you are still incapable of paying off your credit debt.

Confusing Terms And Conditions

In addition, credit cards have complicated terms and conditions that at times even the borrower himself does not understand completely. At times these complications lead to the borrower assuming the wrong things and thus, using the credit card the wrong way. Also sometimes the borrower is not entirely sure of the uses for the different amounts that he is paying for, such as additional fees like interest rates, service fees and such.

Clearly, to have credit is indeed a great thing especially if you do not want to bring with you a lot of cash at all times. However, it is such a huge responsibility to own a credit card that it is crucial that you yourself must first understand the limits that it provides you. In order for your credit card to help you in your finances rather than burying you in a huge debt, you have to make sure that you are absolutely capable of regulating yourself as to which items are necessary and which are not before buying such items in the market.

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