The Good, The Bad and The Ugly of Credit Cards

Take a look around whenever you are out shopping or at a restaurant. Do you notice how many people no longer use cash or checks? It’s virtually everyone!

Just think about that VISA commercial where everyone is using their credit card, and when someone decides to pay with cash, everyone looks at him as if he’s from another planet. Yes, that’s the power of plastic.

Credit cards have quickly become the fast and convenient way to pay for everything, from parking tickets to online purchases. With one easy swipe or the punching in of a few numbers, you can make a major purchase now and pay for it later in monthly installments. It’s that easy.

But everyone has also heard horror stories about credit card usage. Some people are thousands of dollars in debt and have to declare bankruptcy, while others have had their credit card cut in two by a cashier because it was declined.

Despite all of the bad things associated with credit cards, there are also good things you can get from them. If you learn how to manage your money wisely and establish good credit history, then your financial future will be much easier to control.

The Good Side of Credit Cards

Credit cards have taken over the world, yet there are both good sides and bad sides to the power that these plastic pieces hold.

With people using credit cards today more than ever before, there have to be some reasons why they choose credit over cash.

Here are a few reasons why credit cards can be good for you:

  • You can purchase expensive products and services now and pay for them over time. These can include student loans, cars, furniture, electronics and even a home.
  • Credit cards are much easier to deal with and carry around than a handful of dollar bills or a bulky checkbook. When you’re in a rush, credit cards come in super handy.
  • You can make purchases online, such as for plane tickets, hotel reservations, or car rentals, without having to go to the business or speak to a representative in person.
  • You can make payments online without having to send a check. If you decide to make a payment on a business website, all you have to do is input your credit card information and the business will charge your account.
  • Many credit cards come with extra benefits, such as discounted gas purchases and hotel reservations, and they may even offer cash-back bonuses, frequent flier miles, and more.
  • They come in handy in financial emergencies. If you don’t have enough money in your checking account, you can use your credit card to pay for an expensive emergency, such as replacing a flat tire, paying for a hospital bill, or buying a ton of school textbooks.
  • You can establish a good credit history. As long as you always pay off your minimum payment requirements and make them on time, then your credit history will remain on good terms. Then you will be more financially set for future credit card purchases.
  • The Bad and Worse Side of Credit Cards

    Credit cards can be a financial blessing, but they can also be a credit history curse. Just as there are many good reasons to get a credit card, there are also many things you should try to avoid when you use them.

    Here are some of the bad aspects of credit cards:

  • High interest rates and fees can pull you deeper into debt. Every time you make a credit card purchase, your future payment for the purchase will have an added fee attached to it. If you rack up too many expensive purchases, you might end up paying double the original price. You should always choose a credit card with the lowest interest rate.
  • If you use it, you might abuse it. Because credit cards are so easy to use, you might go overboard and end up buying everything in sight! If you can’t see how much you have left, like you can with cash, then you assume you still have money left. This is a quick way to accumulate a high credit card balance.
  • Missed payments mean a messed-up credit history. If you constantly make late credit card payments, or you don’t even pay them at all, then you will permanently affect your credit history for the worst. And if you have a bad credit history, you won’t be able to apply for a loan, rent a house, buy a car, or even get hired for a job!
  • You might become a victim of credit card dependency. You should never rely on your credit card as a complete source of income, and you should never use it for every single purchase you make. If you use your credit card to bail you out of every financial situation, then you’ll never learn how to manage your money wisely, and you won’t become financially independent.
  • If you learn how to manage your credit card wisely, then you will be able to start successfully investing in your future. Any missed payments or overly-expensive purchases made today can come back to haunt you in the future, so just be careful with the power of your plastic.

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