#I also got a fraudulent charge on my debit card today so I can’t get groceries until I get a new card… hate & carnage

[vengelark]

squatted to pick something up and split the seam of my jeans down my entire ass .

[georgeshutcheson]

Credit Cards: Advantages and Disadvantages | Are Credit Cards A Boon or Bane?

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Credit Cards: Advantages and Disadvantages | Are Credit Cards A Boon or Bane?

In today’s article, we are going to see 3 Disadvantages of using a Credit Cards, 3 Advantages and 1 Secret Advantage where this piece of plastic can help you buy a house.

And towards the end, I’ll give you a Bonus Tip to help you understand how to use Credit Cards wisely. So, you know what a debit card is right? It’s a card that deducts money from your bank account every time you use it. But using a Credit Card is like taking a quick loan from a bank and you have to repay back this money to the bank within a billing cycle, which is usually 50 days. These 50 days are your interest-free period. Does it mean you can spend £10,000 using a Credit Card on your first day? Not really. Your Credit Limit, i.e how much can you spend using your Credit Card is decided by the bank, based on your Income level, Credit Score and so on and so forth. So basically, Credit Cards give people money that they don’t have and that creates problems.

Problem #1:

They Promote Impulse Buying. Every website you go to, will show you an advert. In fact, you must be seeing one right now. It’s not wrong to buy. However, when we are not in a good place mentally, just to get a quick buzz, we buy shoes we don’t need or that 5th Game of Thrones T-shirt that just lies at the back of a closet. This kind of impulse buying is pushed further when you have a credit card, because with a Credit card you don’t have to pay now, you can pay later.

So, if you already have these emotional issues to resolve first, then credit cards might not be your friend. In fact, comment below and tell me what was the last purchase you made that you regret? Was it a midnight ice cream or a T-shirt you already had or shoes you didn’t need.

Problem #2:

They put you in a lot of DEBT. Interest Rate of Home Loans… is around 8%, Car Loan.. around 10%, Personal Loan… around 12% Do you know what’s the interest rate of Credit Cards? Between 24 to 42% per annum.

If you pay back the money to the bank within your billing cycle then okay… 0 interest. But if you default by just one day, then here’s what happens. You have to pay interest not just for one day, but starting from the day you made the transaction. Assuming you made it at the start of the billing cycle then your interest is on 51 days, not just 1 day. Late payment charges will be applied.

You have to pay 18% GST on the overall interest accruing. And God Forbid, if you make a new transaction, before paying off this old amount, then this new transaction won’t have any interest-free period and it’ll start attracting interest from Day 1.

Apart from these payments, 2 solid ways that Credit Card companies make money are this… If you withdraw cash using your Credit Card, then you start paying interest right from Day 1.

So the day you get your Credit Card, Swear to God that no matter what, you will pay your dues on time, because if you don’t…

Problem #3:

Credit Cards can spoil your CREDIT Score.

Now, listen to this very carefully. Credit Score is a 3-digit number, ranging from 300 to 900. This score is used by Banks, credit card companies or even Insurance agencies to decide whether or not to offer you credit and what the interest rates would be. This means, if you want to do Business in this country… then having a good Credit score is very important

For now, those were the 3 problems of having a Credit Card. So, here are the Top 4 Reasons why Credit Cards are great…

1. Credit Cards have Benefits.

If they are charging you so much interest, surely, they must be offering something in return first. Depending on the Credit Card you opt for, you can get benefits like air mile, free gifts and discounts a selected stores. However, getting a Credit Card just to get free food at Airport lounges is silly.

The more important benefits of Credit Cards are:

2. They are Universally Accepted.

I bought my first Credit Card in 2012, when I had to travel to US for work, alone. It was my first international travel and I was told that Debit Cards might not work everywhere. So before I left, I got myself a Credit Card and thanks to it, I had no issues grabbing a quick meal in between a connecting flight at Heathrow where the currency was Pounds, paying for the cab from airport to the Hotel, and checking in at the hotel where the currency was Dollars.

And when I went out to see the world, it worked at all stores and amusement parks. They also work across multiple websites, whether you want to buy an online course or set up a recurrent transaction at Netflix.. But if you are using them everywhere, surely safety must be a concern. Which is why, they also offer…

3. Strong Buyer Protection

These days, we seem to make a transaction at some new website every month. The good news is, the Central has shifted the responsibility of proof of customer liability to the bank. Which means, if you don’t get your order, you can ask the credit card company to raise a dispute against that transaction. This is called ‘ChargeBack’ and it protects you from fraudulent transactions. But read the terms and conditions of your Credit Card carefully to ensure that they do offer the ‘Charge Back’ benefit.

And now is the time for the Secret Advantage:

4. Credit Cards build your Credit Score.

You’ve got to establish your Credit Rating or you can’t borrow. As we discussed earlier, Credit Rating or Credit Score is a very important number and one of the ways of building it, is to get a Credit Card, use it to spend small amounts, but repay it back immediately. This repaying on time, over the years, is what will build your score. And when you have a good Credit score, this is what happens: You can get a good premium for insurances. You can negotiate the interest rate on your Credit Cards.

Most importantly, you’ll get a better interest rate on your loans: be it for Education, starting a Business or to get your Dream House.

I think by now you know that Credit Cards can either make or break you. So to use them wisely, I am going to give you a simple advice. While using Credit cards, remain SANE. You are not taking Credit Cards for money, but to build your Credit Score.

Direct debit will help you from falling into the hell hole of paying interest, taxes, late fees and getting a bad Credit Score.

Read More: The Basics of Credit Cards for Beginners

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