Q&A: What are the positive and negative sides of credit card’s usage?
Question by uk_emmigrant: What are the positive and negative sides of credit card’s usage?
Please,list me some of the positive and negative effects of using credit cards.
Thanks in advance !
Best answer:
Answer by Paul R
Negative:
People who lack self-discipline spend money they can’t pay back before the due date, and run up huge debts (kind of like Congress). Then, the atrocious interest rates make them very hard to pay off.
Positives:
1) You can establish good credit so that when you want to buy a car or house, you can get a loan on better terms.
2) You can buy stuff online and if someone manages to steal your info and run up a huge bill on your card, your loss is limited to $ 50 by law.
Edit 1:
Yes Rebecca, I DO know that, hence I don’t need to do any work or research on it to convince myself, but many people don’t. What is your point? Are you saying that 13% to 23% interest is not atrocious? Or, that the concept of usury is outdated?
The following sources are for you, to show that there are many people who do not know what they are getting into. Maybe they should, but the fact is, many don’t.
Know better? Leave your own answer in the comments!
Positives:
– Helps build credit which can turnout to be a double edge sword
– Helps you afford things you don’t have money for at present
– Very convenient way of carry money arround with a good safety guarantee from credit card lenders
Negative
– Learn bad spending habits that can easily become addictive
– Excessive fees for those not discipline enough
– Easily accessible to all
– Uncontrolled spening
Paul’s mentioned some of the positives already so I’ll contribute some of the negatives:
– Harder to budget sometimes. If you use cash, you can’t overspend when you’ve run out! It’s crazy, but some people are STILL paying off their holiday purchases from last year according to a recent Holiday Spending survey (http://www.ebillme.com/merchants/online-spending-index/)
– Depending on the credit card, you might have to pay a hefty annual fee.
– Extra ‘perks’ like those convenience checks credit card companies like to send you actually cost you quite a lot of interest! Sneaky.
Best to use cash as much as possible – if you’re shopping online, companies like eBillme even offer a lot of the same benefits as credit card companies like buyer protection and cash back rewards so it’s worth looking into.
Paul you KINOW the interest rate when you sign on and using credit and NOT paying it off monthly is living way beyone your means on credit cards.
Homework?