Credit Cards Pros and Cons

Much has been talked about the past few year about American spending habits. We use credit and credit cards extensively. There are pros and cons to using credit cards. Let start why using a credit card is a good thing. The way that our economy is set up is so that lenders look at credit score, and often times establishing credit start with a credit card. So it safe to say that using a credit card is good for establishing and creating credit. It is a way that one can borrow money for thirty days interest free. Having a credit card and also help in case of an emergency. In essence is a short term loan.

Now to what most people want to hear, why using a credit card is bad. Why would you want to use one when so many people are in debt due to a credit card. Getting a credit card is getting a loan, so there is interest cost if payment for what you have " borrowed" on the credit card is delayed past the first month after the use of the card. Interest rates are much higher than any other loan. Most credit cards today have a variable interest rate which can change at any time based on current economic condition or based on the companies financial position. Companies that issue credit cards can put people a risk of over spending as credit card companies reward good behavior with increasing the spending limit, without review if of an individual income to determine if repayment could be made.

There are many other reasons that an individual may choose to use or not to use a credit card, bottom line weight the good with the bad. Making sure to have a clear understanding of what is a credit card , how much can you afford to pay, and how long will you pay what has been borrowed on a credit card. One of the biggest mistakes individuals make when using a credit card, is not understating that it is a loan. determine how much will be set aside from each paycheck to payoff the loan. Most commonly individuals use the available credit on the credit card and the money in their bank account, thus creating a difficult situation when payment is to be made to the credit card loan.