Advantages and Disadvantages of Credit Cards Essay Example

your card in the case they find it. In result, you won’t worry because your money is safe. Today, everyone likes to shop online instead of going to overcrowded stores and wait on line to check out.

It is impossible to make a purchase over the phone or the Internet without a credit card. Consequently, more and more people carry a credit card with them.Moreover, credit card might also serve as an emergency fund to someone. For instance, People can pay bills at the beginning of the month using their credit card and the money will be then charged at the end of the month.

This means that they have nearly a month to pay their bill. Similarly, if your child needs to go to the hospital immediately, you don’t have any cash with you; you can pay the medical bill with your credit card and then be charged after a month. Also you can pay off your credit card bill after you get your paycheck next month. In this case, you will get the points by using your credit card, and then receive the rewards after reaching a certain point.

Moreover, there are not only advantages, but also disadvantages to using credit cards. Sometimes, credit cards might cause huge problems to individuals. For instance, credit cards entail high interest rates. Many people use their credit cards without feeling that they are spending money because the money is not being taken right away out of their pocket. In addition, they don’t how much exactly they spent until they get their monthly statement at the end of month.

The problem is even increased if they forget to

pay the bill on time. This is the credit card company will charge high interest fees or late fees that sometimes can reach to more than 25 dollars. Also, if people just pay their minimum payment every month this means that they just paid their interest, not the principal amount to begin with they used. In this way, they will have less budget flexibility in the future because their part of take-home money already used in the past.

Furthermore, some people do cash advance with their credit card, but they don’t know or understand what the secret behind cash advance is. Getting cash advance by using credit card is the worst method of getting of money. This is similar to taking an extremely expensive loan. When you withdraw cash from an ATM machine using your credit card, you begin paying your interest immediately.

Unlike when you purchase an item with your credit card, you pay the interest after the date the payment was due. Also you have to pay fee of up to 2 to 4 percent of the amount advanced. So, you are actually spending a huge amount of money. If you know disadvantage of using credit card, you can save this amount of money too.Credit card impacts our life significantly. A lot of individuals cannot pay off their credit card bill.

They only can pay minimum payment every month, but they still use their credit care often. The balance like a snowball is rolling bigger and bigger, and then makes them in debt crisis. Debt has driven people to commit suicide because harassing phone calls and letters from debt collector. As I mentioned at

beginning, the movie Mixed out, one college student named John applied his first credit card in the campus. After he died, his mother realized that John suicide was because of the credit card debt. He had a total of 12 credit cards.

His part-time jobs were not enough to pay the monthly interest. The credit card companies use different ways to sell their credit card, and extend to college students on campus because Card Company considers that college student have more ability to pay their bill in the future, and all the college students need money now.As a college student, I learn the lesson from my personal finance how to use the credit card wisely. The chapter tells all the cardholders be aware of the credit card. If you do not have enough money, do not use or purchase things that exceed your budget with your credit card. Generally, people who have a lot of credit cards should not have them because they do not have enough money to pay off the principle or sometimes cannot payoff minimum payment.

They are stuck with extra fees and interest penalties. After you use your credit card, you have to pay off your bill every month. It is so simple and easy to get rid of interest, and this extra money you paid that you can get something else. As cardholders, it is really important for us to know to purchase within our budget, and do not exceed our own limit.

Having a credit card not a bad idea, it is depend on how your use your card. If everyone knows all the knowledge about credit card, it

will not bring out so many problems to you no matter how many cards you have.