The Good, the Bad, and the Ugly of Credit Cards

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The Good: When a credit card is used properly and responsibly, it may have many advantages for the cardholder. Some advantages to using a credit card may include:

  • Credit cards are very useful for emergencies

  • Credit cards are often required to hold a reservation

  • Credit cards offer protection against fraud above and beyond other payment tools (like debit cards, especially when shopping on the Internet)

  • Many credit cards offer great bonuses, such as cash rebates and frequent flyer miles (you automatically get these bonuses for just using the card!)

  • And perhaps most importantly… if credit cards are used responsibly they can help you establish a positive credit history

The Bad: If a credit card is used irresponsibly, it may have many disadvantages and cause the cardholder financial distress. Perhaps the most devastating result of using a credit card irresponsibly is the effect it may have on your credit history. If you do not use credit cards properly, you can develop a negative credit history and, in turn, lower your credit score. In the long run, a negative credit history can prevent you from qualifying for loans later in life including a mortgage to buy a home or a loan to buy a car. In addition, people with low credit scores have difficulty renting apartments, pay higher interest rates, pay higher insurance rates, and have difficulty obtaining a job.

Don’t let “the bad” scare you away from using credit cards. You want to benefit from the advantages credit cards offer, right? It is quite easy to use a credit card responsibly. The tables below outline both positive and negative credit card practices:

To use a credit card POSITIVELY:
Pay your credit card balance in full every month
Pay your credit card bills on time
Apply for only credit cards that are needed
Keep track of all your credit card charges by keeping receipts
Check your monthly credit card statement for errors

 

AVOID the following when using credit cards:
Making late credit card payments
Paying only the minimum payment
Exceeding your card’s credit limit
Charging items that you can’t pay off immediately
Owning too many credit cards

Avoid the bad and even worse… the ugly by following the guidelines above to use a credit card responsibly. Take advantage of the many benefits credit cards have to offer!

Comments

Timely Information

 This information is summarized very well.  Our class is studying credit; how to apply for it, and how to maintain a good credit history.  Besides making late credit card payments, be very weary of paying only the minimum balances.  You may be paying up to 24% interest on your unpaid balances.  Always read the fine print when applying for a credit card to find out the grace period, the interest rate, and if the interest rate can change.
Mrs. Lyon

Another minus of using credit

Another minus of using credit cards is concerning their use in web purchasing. If a person doesn't have a good antivirus on their PC there is a high risk of fraud when using unsafe websites. Young people usually can distinguish an unsafe site and they usually know which antivirus is actually able to protect their purchase while an old person may be unaware of these details.
I wonder what can be done about this...

This is so true. There are

This is so true. There are advantages and disadvantages on using credit cards. It is very important to be careful on using that and not abusing it. These tips are really good.

This is a good post with lots

This is a good post with lots of information on "Credit Cards" issue at all. Was seeking forward to know about this entry and I'm pleased to know that credit cards are very useful for emergencies. Thanks the head up and keep posting.

I do agree with your post. 

I do agree with your post.  As with anything there are advantages and disadvantages to using credit cards.It may either help or become a detriment. If you are able to pay your bills on time every month and not carry over a balance, credit cards are a great convenience. The cards can also land you deep in debt. This often occurs if you're unaware of the terms of the credit card agreement, and if you carry too many cards.

Thanks for this interesting

Thanks for this interesting post. A proposed credit card hotline is the latest issue to fuel the fiery debate over the Consumer Financial Protection Bureau. The hotline would essentially take calls from concerned customers, and the agency would compile grievances about charge card companies. It pays to be very careful in choosing sources for this matter to avoid scam.