Advantages and Disadvantages of Credit Card

Credit Card

With their simplicity of use and pay-back convenience, credit cards have become an integral part of our lives. A credit card’s savings, incentives, and promotions are unrivalled by any other finance instrument and promise a jackpot for the intelligent consumer. But even the best Credit card can become debt traps if not handled wisely or if you spend more than you can repay when the bill arrives.

Here, we have curated the advantages and disadvantages of Credit card.

Advantages of Credit Card

1. One of the most obvious advantages of credit card is the convenience of credit at the palm of your hands. It facilitates a necessary purchase and also does not affect you bank balance.
2. Credit card is a handy tool to create a healthy credit footprint. Owning a credit card allows the banks or financial institutions to track your credit history better. This of course is based on the card usage and your regular repayment. This in turn helps in determining your solvency.
3. These the best credit card scheme in India offer additional benefits and discounts in partnership with different sectors for a better customer retention. The benefits include, flight privileges, holiday package, online purchase etc.
4. Owning a credit card opens up avenue of paying off a payment in EMIs and hence having no extra burden on your financials at one go.
5. Credit card also helps in creating a healthy or discipline expense habit. While a credit card offers all records of expense an individual can plan or control their expenses better.
6. Credit card offers you an added advantage of a flexible credit. During the period from when purchase is made and till the time the credit card bill payment date is due, there is window of no interest wherein you stand to benefit. If you pay off the whole amount before the due date not extra interest is incurred.

Disadvantages of Credit Card

1. Availing a credit itself is a difficult process and a credit worthiness is to be proven in front of the credit card issuing financial institution or banks.
2. Owning a credit card though should create a disciplined expenditure amongst individuals, in most cases it’s quite the contrary where there is unnecessary expense in account paying it off later.
3. There are unnecessary fee charged for credit card, such as annual fee, fee charged for over dues etc. 
4. A payment over due on credit card may result in negative credit score and may lead to negative solvency report, which may in turn affect your if you are in need of a loan at some point.
5. Though there are no interest tenure between payments, the interest that may incur after that is exuberant to the least in some cases.
6. Some credit card facilitates dictates that you spend a certain minimum amount for the credit card to be active, this in turn encourages unnecessary expenses.

Comparing advantages and disadvantages, it may not be enough for an individual to decide whether they should avail a credit card or not, however, if an individual is careful enough to use it without falling into certain temptations then the credit card when used wisely is a very good instrument.