That’s why it’s important to closely monitor your statements, which is something you’ll have to take the time to do every month. Plus, you’d be surprised how quickly swiping your card and interest can add up. It can often be easier for theft or fraud to slip by unnoticed with credit cards as opposed to our bank accounts. Simply by having one, a credit card opens you up to another avenue of fraud-especially if you tend to use it for online purchases without checking the security of the site. Annual fees are charged by your bank or credit card company and are added to your statement once a year. In addition to paying interest on all purchases, many credit cards also have annual fees. This means that you’ll pay more for everything you purchase using your credit card and the longer you wait to pay off your balance, the more interest you’ll accrue. One of the biggest disadvantages of credit cards is the fact that you have to pay interest on purchases, and typically, these interest rates are fairly steep (unless you get a special offer or have exceptional credit). Even if you carry only a small balance each month, this might eventually snowball into bigger debt. If you have cards with large credit limits, it can be tempting to spend more than you can afford to pay off. When you shop with cash (or the money in your bank), you’re more likely to consider the cost of an item first because it’s a finite resource. Temptation to Overspendįor those who tend to allow their spending habits to get out of control or struggle with a shopping addiction, a credit card can be another source of temptation that could worsen the problem. Key Takeaways for the Pros & Cons of Credit Cardsįirst things first, let’s address some of the doubts you may be having by acknowledging some of the potential disadvantages of having a credit card.Deciding Whether or Not to Get a Credit Card: Factors to Consider.Better Currency Conversion and Foreign Transaction Fees.Potential for Harm to Your Credit Score.Use the links below to learn more about the specific advantages and disadvantages of credit cards. To help you make a decision, we’ve broken down the advantages and disadvantages of credit cards and what to consider specifically if you do choose to get one, so you minimize your risks. If you’re considering skipping credit cards, you’ll have to consider both the pros and cons of credit cards. But there are some major advantages to having a credit card or two-they’re convenient to use, can get you out of sticky emergency situations, and are a useful credit-building tool just for starters. You’d have one less bill to worry about each month and your finances might be in better shape without the temptation to overspend and potentially accumulate more debt. Do we really need credit cards or can we get along without them? At first, it doesn’t seem like a bad idea.
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