Saturday, May 09, 2009

Credit Card Benefits and Drawbacks

Credit cards have got both benefits and drawbacks. It is wise to see both before applying for a credit card. While they can be very useful, credit cards can also be risky. Even people who are usually good with their money get into problem with credit cards. A credit card can be useful, but may also stop up putting you in a hard financial state of affairs if misused.

Here are some of the benefits of credit cards:

Withdraw cash 24 hours a day, anywhere in the world.

Buy online. It is the quickest and easiest way, and you are protected against credit card fraud.

Repay in regular instalments. Typically, these incur interest.

Usually, there is an interest-free repayment period, which you can utilize to refund your debt in full, interest-free.

One of the chief benefits of using a credit card rather than a debit entry card is the protection provided by the Consumer Credit Act. This states that if you have got got problems with commodity or services you can get your money back from the card issuer if you can't get it back from the supplier.

Some cards supply purchase protection insurance, which pays out if something you have bought with the card is lost, damaged, or purloined within ninety years of the day of the calendar month of purchase.

A credit card can cost nil - if you pick a card that doesn't charge an annual fee and you always pay the measure in full every month.

A credit card can salvage you money if you take one that earns you cash every clip you purchase something. How much cash you get back is calculated as a small percentage of the amount you have got spent on the card. Some cards offer inducements other than cash - Air Miles or shopping vouchers, for instance.

Even if you make not pay your monthly measure in full, a credit card can be cheaper than running an overdraft on your current account, especially if your bank charges a monthly fee as well as interest when you overdraw.

Using a credit card can work out cheaper than using traveller's checks or foreign currency to pay for things abroad. This is because the exchange rate used by card companies to convert foreign disbursement into sterling is better than normal tourer rates. However, because of credit card charges for cash withdrawals, a debit entry card is better if you desire to utilize plastic to purchase currency, whether over the counter or from a foreign cash-machine.

You can give to charity for free if you subscribe up for a charity credit card.

Credit cards are often cheaper than loans for short-term borrowing. You pay interest on the remaining debt, not the full amount - and there are no early salvation penalties.

Credit cards offer flexibleness to fit uneven income and outgo patterns: you take what to pay off each month, between the minimum and the sum outstanding.

Their consolidated accounting enables one check to settle down multiple transactions – while all look neatly on one pre-prepared statement each month.

There is an automatic ‘interest free' time time period per statement period.

Credit cards enable distant buying via the internet, by telephone or mail order.

Credit cards can include further benefits like insurance screen on purchases, cash-back, AirMiles, Nectar or Reward points, and holiday discounts.

Here are some of the drawbacks of using a credit card:

Credit cards can be unnecessarily costly.

Credit cards may be expensive for cash withdrawals

Credit cards may be expensive for foreign currency purchases.

Their credit bounds can be deficient for your requirements.

They encourage a ‘pay now, concern later' outlook and do it too easy to get into debt.

Credit cards are very unfastened to fraudulent use.

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