Disadvantages of Using Credit Cards

A Credit Card is a system of payment that allows its holder to buy goods and services based on the promise by the holder to pay it later. If used wisely and responsively, credit card is not a problem. But if used unwisely can become a liability, especially if you make heavy purchases and lose control of your spending. While using credit cards if you don’t make timely payments or pay only the minimum amount due, you will fall into credit card debts which rise month by month. Following are some of the main disadvantages of credit card-

The biggest disadvantage is with the convenience and easy availability of credit cards you tend to spend more than you earn or your budget. If you go out shopping and see something that appeals to you but have not carried cash or can’t afford at this time you easily purchase the thing by using your credit card. And once you start doing un-monitored spending, the accumulated bills will make you fall into the debt trap. By making spending more than what you earn, you have to borrow from other sources to pay your credit card bills, but unwittingly creating much bigger burden as a defaulting borrower.
If you use credit cards but pay just the minimum amount each month than the debt will increase with time. Credit cards are considered by many as “free money” at the time and encourage one to use it without bound. But remember you will have to pay it today or tomorrow and the longer you wait, the more money you will owe since the credit card companies will charge you interest each month. Like this you pay more for purchased item than its ticket price if you include the interest paid.
Using credit cards unresponsively can have a great effect on your credit rating. Consistently being late in making payments can damage your credit score. 35% of your credit score is your payment history. So, pay your credit cards bills on time to preserve your credit score. But just as using credit cards makes life easier, but also creates risks if stolen or falls into the wrong hands. It could take days before a stolen credit card charges can be cancelled and refuted-if your credit card issuer or company doesn’t have a good security system. So, before using or applying for credit cards fully understand the responsibilities that come along with it.
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