Eric102,

Hello and welcome to the Forum.

I'll get right into answering your question.

Pro's and Con's of using a credit card:

Pro's -
1) You can buy something much earlier than you can really afford to buy it cash. It allows you to have something now rather than later.

2) If you have a credit card.. charging on it and paying on it establishes a history (your credit history) which in turn can help you get a better rate perhaps on bigger items such as a car or a house.

3) It's convenient and easy to use and is accepted just about anywhere. This means no stopping at ATM's to get cash.

4) Some cards offer rewards in the form of sky miles, cash back bonuses, points, etc.

5) You can usually get them with your favorite sports team on it.


Con's -

1) If you maintain a balance.. you will be charged interest. If you maintain a balance.. you are now in DEBT. Interest is merely the COST for carrying the debt.

2) If you are ever late.. over the limit... or close to your max available credit... your credit score starts going DOWN. Your interest rates may also INCREASE because of this.

3) Because you can buy something now rather than when you can afford to buy it cash.. you must now pay monthly on it, which costs you more.

4) The promotional gifts you receive and the rewards you get are nothing compared to the amount of interest you will pay.

5) Even if you DO pay the balance in full every month. Statistically.. you will still spend more for the things you buy that you would have if you spend with cash instead.
If you spend all your cash.. you can't spend anymore.. but if you have a CARD... well, you can still spend... and you might "THINK" you can pay the balance in full, but things do happen, and debt enters the picture.


Hope this helps..

Well completely agree with you. credit card should be taken as an instrument which is meant to help you and should be used judiciously. make sure that you clear your balance with in the credit free period. if you continue to do this consistently then there are no cons only pros.

The only pros i would say is pay your credit card payment in advance, not to wait for last day as one never know what would happen in last day of payment.

Well completely agree with you, credit card is an useful instrument if you could make your payment in advance. Moreover it helps to make you improve your credit ratings, some which helps you a lot in the future.

My folks always say CC's are a double-edged sword. Tread wisely.

Absolutely tread wisely is the key word and indeed it is a double edged sword.

The biggest con i have seen is that people issues credit card and goes for a holiday trip or for holidays and put on too much debt on there side (:

well yes that happens when you use it for indulging in mindless shopping. use it only when you really could not pay through cash.

Yes absolutely especially those who are addicted to shopping, the shopaholics should keeps themselves miles away from a credit card. Infact if you want to use plastic money at all, go for debit card instead.

Yes, you are all correct. Let me just add this based on my own experience. Credit cards are a very big help, but a big temptation as well. On the negative side, when you see something that is not necessary but you love it, what immediately comes to your mind is that, I can have that now and pay when my money (or salary) comes. When payday comes, certain circumstances occurred and you have to use the money urgently instead of paying the stuff that you promised yourself to pay, and because it can also wait till your next salary comes. Now the problem is, the monthly charge is increasing. If you could have waited for your payday before buying that "something" that was not on your plan, you won't have any debts at all.
On the positive side, whenever there is an emergency and you don't have extra cash at the moment, you can use the credit card. Credit cards are really very helpful as long as you are wise enough and you know your limits. Like what they said, don't spend more than what you earn.

There's a lot of good advice here. Just remember to be responsible with what you use your credit card for. I have seen people use their credit cards for buying large items like cars and it took them years at a very high interest rate to pay off the credit card. What they didn't understand was the cost of the car was double, because of the high interest rate being charged, by the time they paid it off.
Use the credit card wisely and it can be your friend. Pay it off in full every month and you won't have a problem. Let the balance continue to grow and you are heading for financial disaster.

RichS CFP(r)
www.insimplelanguage.com

True that. And to add, it you do not religiously do this (pay your balance) then there won't be pros, just cons. I have seen many who have suffered from this Credit Card debts. I believe it's the spending-discipline that lacks. People needs a little tap to be reminded from time to time.

Are you looking in to getting a credit card? I think that the instant pros/gratification are pretty obvious. But you need to make sure that you are someone that can manage their money and understand what payments need to be made each month to avoid debt. You want to have good credit, so if you are an impulse shopper, I would not suggest getting one.

Credit Cards. You can’t live with them, and you can’t live without them. Some people would say that’s kind of like….never mind. In many ways it’s true. Some people think that if you don’t have credit cards, you can’t get into debt. well, maybe.
but here’s the catch. If you don’t have a credit card, you have a very difficult time establishing credit. In addition, there are things that you absolutely can’t do without a credit card. Try making airplane reservations without a credit card. How about reserving a hotel room? A credit card is sometimes accepted as a 2nd form of identification. Last but now least, using a credit card is the best way to establish your credit.
Credit is important. If you want to buy a house or get any kind of loan, you have to have credit. You have to be able to show lenders that you are a good credit risk. You do this by having a good credit score. So how do you establish a good credit score without getting into debt? Simple. Get a credit card. charge as little as $10 a month on that card. when the bill comes, PAY IT!