I am a consumer, as are most Americans. I buy things from food, to clothing, a home, vehicles, and other various items. Most of the bigger purchases in life require credit. Credit must be earned and maintained to create a good credit rating or score. Like a lot of people, I started earning credit with my first credit card in college. While credit cards have been helpful, there have also been negative things about them.
Credit cards are great for convenience. Just swipe or tap against the machine to pay. You don’t have to take the time to count cash or wait for a cashier to count your change and hope they give you the right amount back. They are also convenient when buying gas for your vehicle at the pump. Temptations of snacks and drinks can be avoided by not having to go into the convenient store to pay.
Con: Identity Theft
One of the cons with credit cards is the risk of having the information stolen. I once had someone make a purchase using one of my cards, but my credit card company noticed it wasn’t actually me who had made the purchase. This was inconvenient, in the fact I had to write a few letters and make a few phone calls to the company for a case to be built against the thief. The charges from my card were dropped and I didn’t have to pay them. I was lucky my credit card company was looking out for me. Things could have been a lot worse. Many people aren’t so lucky.
Pro: Building Credit
Credit cards are a good way to start building credit. Using a card to make a small purchase once a month and paying the balance each month, will help to create a history. By paying the balance at each month, paying interest fees can be avoided. Finding a card with a low interest rate, will keep payments low if balance cannot be paid each month.
Con: Getting into Debt
Getting into debt can happen quickly with credit cards. Stores will offer cards specific to their store for a great deal. Some will offer money off the first purchase, send coupons, and offer cash back. The interest rates are often high. Many times if the balances are not paid in full each month, the coupons that were used were worthless. The amount paid for the purchase is often higher than what the regular price would have been. The cash back values are often very low. Is it worth spending $1000 to get $10 back? Always read the fine print when awards programs and cash back programs are offered, to see if they are worth it.
Credit cards can be very helpful in an emergency situation. Life events often happen at inconvenient times financially. An unexpected vehicle repair, an illness, or another disaster can happen at any moment. Being able to pay for a large unexpected expense later and/or over time can be helpful.