Understanding the Pros and Cons of Using Credit Cards

Understanding the Pros and Cons of Using Credit Cards
  • Opening Intro -

    Credit cards have become ubiquitous in modern society.

    From online shopping to everyday purchases, using a credit card has become the norm for many people.


But with this convenience comes potential risks and pitfalls that can lead to financial hardship if not managed properly. In this blog post, we will explore the pros and cons of using credit cards in today’s market, as well as some tips on how to use them wisely.

We’ll also discuss the dangers of overspending and accumulating too much debt when using credit cards. By understanding both sides of the coin, you can make informed decisions about whether or not it is wise for you to use a credit card in your daily life.


Necessity of Credit Cards

In today’s digital market, credit cards have become an essential part of everyday life. From online shopping to paying bills, many people rely on their credit cards for a variety of purchases and transactions.

They provide a convenient way to pay for purchases without having to carry cash. By using your plastic wherever you go, you can avoid the hassle of dealing with bills or carrying large amounts of money.

And if you shop online, or make a reservation for travel, credit cards have become a necessity. The can even be used to pay medical, utility, and other bills.

Finally, credit cards offer an added layer of protection for your financial security. In the event that your card is lost or stolen, fraudulent charges can easily be disputed and refunded. This way, you don’t have to worry about any unauthorized purchases being made on your account.

Credit Cards Builds Credit

Another reason why credit cards are important is that they can help you build up your credit score. Responsible use of a credit card can demonstrate to creditors and lenders that you have the ability to pay back loans, making it easier for you to get approved for financing in the future.

This can be especially helpful if you are trying to purchase a home or car and need to prove your creditworthiness. Your responsible use of credit cards is also checked by landlords and employers.

Be sure to monitor your credit report regularly. This will help you spot any unauthorized activity or errors in your account information.

Keeping up with the latest transactions and balances on your credit cards can also help you detect any fraudulent charges quickly, and then take action to resolve them. By being mindful of your credit card usage, you can keep your finances in check and protect yourself from any potential risks.

Credit Cards Come With Rebates

Credit card rebates are an attractive incentive for many consumers when deciding which credit card to choose. In some cases, you can earn up to five percent back in cash on your purchases with a rebate credit card.

This money can be used for just about anything – from paying bills to stocking up on groceries or taking a much-needed vacation. Rebate cards also offer rewards like points or miles for each purchase that can be redeemed for merchandise, gift certificates, and travel discounts.

Here are some of the highest available programs to get you started on your journey to earning rewards with your credit cards.

  • Platinum Card Rewards –

    Earn up to 5% cash back or points on all purchases, plus exclusive discounts and offers.

  • Gold Card Rewards –

    Get 3-4% cash back or points on select categories, plus special bonus offers.

  • Silver Card Rewards –

    Earn 2-3% cash back or points on everyday purchases, plus extra savings at participating merchants.

  • Basic Card Rewards –

    Receive 1-2% cash back or points on eligible purchases, along with additional benefits from select partners.

With these great reward options, you can easily start saving money while using your credit cards!

When used responsibly, rebate credit cards can help reduce your overall expenses. But it’s important to read the fine print before signing up for a new card – some offer exorbitant interest rates if you don’t pay your bill in full each month.

Make sure you understand the terms and conditions associated with any credit card before applying. With a bit of research, you can find a rebate credit card that works for your budget and lifestyle.



Research suggests that on average, people overspend by 25-30% more when using credit cards than when they use cash for their purchases. That is because credit cards are very convenient – you simply flip out the card or use your mobile device to buy just about anything, at anytime.

You can easily overspend when using credit cards due to the lack of tangible money changing hands during transactions. That is one of the biggest dangers when using credit cards.

Here we will discuss how to recognize signs that you may be overspending with your credit card so that you can take steps to avoid falling into debt.

First, it is important to distinguish between necessary and unnecessary purchases. Necessary purchases often relate to covering essential expenses such as rent or utilities. Unnecessary purchases are those that do not contribute to paying for your basic needs, such as dining out or shopping trips.

It is easy to find yourself spending more on nonessential items than you would like. When you begin to notice this increase, it is a good idea to start keep track of your spending and budgeting accordingly.

Another sign that you may be overspending with your credit card is if you find yourself hitting your credit limit more frequently than before. Maxing out on your credit card limit means you have accumulated a lot of debt that must be paid back.

Likewise, hitting your credit limit ruins your credit score because it’s a indicator that you can’t control your spending.

Recognizing these two indicators is a good indication of overspending that can put you in financial hardship.

Getting Into Debt

Using credit cards can be a great way to manage your finances, but if you’re not careful it could also get you into debt. Credit cards offer convenience and flexibility for making purchases, and if you are not careful budgeting and watching your spend, you can easily run up high credit card debt.

Make sure to have and know your budget and stick to it—try not to go over the limit or take out more than you can afford to pay off each month. Additionally, never max out your credit card—this can have a negative impact on your credit score and make it harder for you to take out loans in the future.

Finally, if you’re already in debt, don’t wait too long to pay it off. Paying just the minimum balance each month can get you deeper into debt, so try to focus on paying off as much of the balance as you can each month.

Comes With High Fees and Interest

Credit card companies are in the business to make money. And interest charges are the most common source of revenue for credit card companies. So it is in their interest that you carry a "revolving" debt balance from month-to-month.

They also make money when you pay the minimum required amount on the payment due date, which minimum amount is interest plus a small percentage (around 0.5%) of the balance outstanding.

Now consider this:

If you paid just the minimum payment on a $4,800 credit balance at the average annual rate of 17% plus 0.5% for principal reduction, it would take you over 21 years to pay it off your balance (considering that you did not have any other charges).

That means paying $13,376.35 in interest charges alone, for a total repayment of $18,176.35 for the privilege of charging $4,800!

No wonder that credit cards are one of the lender’s most profitable product lines; and that credit card debt is the fasted growing debt among American households.

There are other fees that credit card companies charge, which can be costly to you if you fail to use credit cards wisely.


It’s important to understand the terms and conditions of your credit card. Many cards come with an annual percentage rate (APR) that can be quite high, so make sure you know what yours is before revolving any debt into the next month.

Additionally, most cards have late fees or penalties for not paying off your balance on time, so make sure you’re aware of those as well. It’s important to practice responsible credit card use.

The type of fees that can hit you include:

  • Interest Rate:

    The interest rate you pay on your credit card balance will determine how much you pay each month for borrowing money. It is important to know the interest rate of your credit card, as it can vary significantly from one issuer to the next.

    Major credit cards typically charge an APR (Annual Percentage Rate) of about 16-25% for purchases and balance transfers.

  • Annual Fee:

    Many credit cards come with an annual fee, which is a fee that you must pay each year just for having the card. This fee can range from $0 to several hundred dollars, depending on the type of card and issuer.

  • Late Payment Fees:

    If you fail to make a payment on time, or if you exceed your credit limit, many issuers will charge you a late payment fee. This is usually a flat fee that is added to your balance, so it is important to make sure you are paying on time and not exceeding your credit limit.

    The amount charged range from $15 to $35 each time you payment is late.

  • Balance Transfer Fees:

    If you choose to move debt from one card to another, many issuers will charge a balance transfer fee. This can range anywhere from 3-5% of the amount being transferred.

  • Cash Advance Fee:

    Cash advances often have higher APRs, often ranging from 20-30%.

So it is within your interest to following these key guild-lines to avoid fees and charges for the use of the card and to avoid getting into debt and financial distress:

  • Pay the entire balance each month to avoid interest rate charges. If you need to carry a balance due to budgeting constraints, play to pay down the debt quickly.

    If you do carry a balance on your card card, avoid any future purchases on that card. Any purchase you make will be assess interest charges since you are currently carrying a balance. If you do need to make purchases, use a different card.

  • Never initiate a cash advance from your card unless it is an emergency. Cash advances are expensive; and the amount will be assessed interest charges once the advance hits you credit card balance.
  • Avoid credit cards that charge an annual fee unless the card has benefits that outweigh the charge.
  • Make sure to pay your credit balance on time by using automated draft, online bill pay, other other payment that arrived by the due date.


By following these tips, you can manage your credit cards for maximum benefits with little or zero costs.


Good money management starts with being conscious of how you use credit cards and understanding the potential risks associated with them. By taking the necessary precautions when using your credit cards, you can enjoy all of their benefits without facing the potential pitfalls.

So make sure to keep track of your spending and be mindful of any fees or charges you may incur when using your credit cards.

With these tips, you can make the most out of using credit cards and ensure that they are working for—not against—your financial goals.

Image Credit: pros and cons of using using credit cards by envato.com

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Categories: Credit Cards

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Krayton M Davis

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