Looking at the Pros and Cons of Credit Cards

Credit cards can be a blessing or a curse, depending on how you use them. Here are some of the pros and cons you need to consider when using credit cards.

Credit Card Pros:

Build up Your Credit History ~
Someday, you'll want to buy something really big, such as a house or car, and your credit history will be looked at. It will help you to have had credit cards (in good standing!) for as many years prior to that as possible.

Convenience ~
Being able to order things online, or through catalogs, is something you just can't do quickly with cash or checks. Many online sellers, on sites such as eBay, refuse to accept payments any way except by plastic these days. Rental car companies also tend to require a card to make reservations and hotels won't hold your room past mid-afternoon unless you have a credit card on file with them.

Instant Gratification ~
A credit card is a way to "get it now". That desire is increasingly common in today's fast paced society. With a credit card, you can shop immediately, without carrying a lot of cash. You can also pay now and pay later, spending on upcoming paycheck while a sale is in effect, which saves you money if you pay the credit card off shortly after you purchase.

Insurance ~
Most credit cards now carry purchase insurance, covering whatever items you buy using your card. Often, this coverage will extend or surpass the manufacturer's warranty, at no additional cost to you.

Safety Net ~
When emergencies arise, (and they always do), having a credit card can mean access to a tow truck, a walk-in medical clinic, or a plane ride to a funeral. Having at least one card is a prudent move to protect your self against the unforeseeable.

Credit Card Cons:

Interest Payments~
Credit card interest rates are higher than other types of loans. The compounding interest can quickly get out of hand. Once you're behind, it can take years to dig yourself out of debt, and your credit report will be a wreck by then.

Distancing ~
Spending "on plastic" distances the consequences of what you've spent. Credit card dollars don't seem like "real" money, so it's easy to let yourself spend more. It's so easy to whip out the card. When you actually have to watch the cash go out of your hand, you think harder about it.

False Security ~
Making the "minimum payment" makes it sound like you're doing enough, but that's not true at all. Even if you pay thee minimum every month, you will never pay the balance off completely.