A credit card can be a really convenient thing to have and many people have them. However, there are advantages and disadvantages of getting one and it is worth exploring both before you decide whether it is right for you to get one.
Advantages of a credit card
A credit card can be a great way to get some interest free credit. When you use the card to buy items, you will not have to send a payment until you get your statement. In the mean time you will not need to pay out anything. This can mean that you will have the items for up to six weeks before you have to pay for them. A good way to take advantage of this is to put the money that you would have spent if you had not used the card in a savings account. This will not only ensure that you have the money available when you need to pay the bill, but you will also get interest on the money while it is in the savings account.
Having a credit card can be more secure. If you are buying items online, the card gives you some security that a debit card will not. The card has an element of insurance which means that if your item does not arrive or is damaged and you have no luck getting the retailer to sort it out, the card will be refunded with the money that you spent. It is also more secure using a card as card issuers have good fraud teams and no money will be able to be stolen from your bank account.
It can be very quick to pay in a store with a credit card. It can be much easier than trying to find the right amount of dollars. Most stores take all cards and so you should be able to replace carrying bills with carrying one card.
Disadvantages of a credit card
You may have to pay to have a credit card, there may be an annual fee. You will also have to pay interest on the money that you owe, but only in certain circumstances. When you get your statement, you will have the opportunity of paying the balance off in full and not paying any interest. This is the best option cost wise as it means that you will not have to pay out more than necessary. However, you also have the option just to pay a small amount and be charged interest on what you owe. Obviously if you want to avoid paying out any extra money then you will not do this. However, some people might find it useful as it means that they can spread their repayments. It is worth noting that if you only repay the minimum it can take years to repay a card in full and the interest can really mount up. It is therefore worth being very aware of how much the interest is, when you have to pay it and think about whether you are prepared to pay this interest just so that you can spread your repayments.
When we spend using a card it can be harder to keep track of what we are spending. When using bills, you will notice as they slowly disappear and you cannot afford so much. However, when you use a card you will not see the money disappearing and so it can be so easy to spend more money than you would have done otherwise. For most credit cards it is possible to check your balance online. This can be a useful thing to do regularly so that you can make sure that you are not buying more than you can afford. However, if you cannot check like this then it may be far harder to manage. You need to bear in mind that the ideal situation is to be able to afford to repay the whole outstanding balance each month and so you need to spend accordingly so that you will be able to afford to do this.
Some people will see a credit card as a nice chunk of money that they will have to spend on themselves. This will enable them to go out to the stores and buy all sorts of things that they like regardless of how much they cost. They can easily max out their card meaning that they spend their whole credit limit. It can be easy for them to forget that they will have to repay what they owe and that they will be charged interest on it. It is worth remembering that whenever you leave a card not fully paid off when you get a statement, you will be giving money to the card issuer. This is money that you otherwise could have had to spend on yourself.