Credit cards are everywhere. The little pieces of plastic that allow us to spend money we don’t possess have taken over.

As an adult, you have a whole range of options available to you, depending on your needs. If you are a bit short before payday or you need to fund a large purchase, there are credit cards geared to your needs everywhere.

Used correctly, they can be excellent tools for different reasons, used wrongly, and they can cause long term debt and financial problems.

Make sure you do your research on your credit card provider, some of them are more trustworthy than others. As made clear by the Wells Fargo class action suit

We are going to go through the advantages and disadvantages of owning a credit card that way, you can make an informed decision as to whether you should get one.

Advantages

We will start with the advantages of owning a credit card.

Credit Building

Your credit file tells potential banks lenders and businesses your history of money lending and how you did when it came to paying on time. If you use your credit card only when necessary and payback before the deadline, you will increase your credit rating. This is a great way to build up credit if you have no credit history.

Simply borrow small amounts with your credit card every month and then pay it off.

Make sure you pay it off on time, though or this advantage will become a disadvantage, missed payments or late payments can harm your credit score.

Safety Net

Having a credit card works a bit like a safety net. Everyone faces unexpected pitfalls now and again. If your car breaks down at the same time your rent is due and you have unexpected medical bills, you may not have enough to cover the cost.

A credit card can be a protective safety net for when this happens, allowing you to pay off your costs, then pay it back in your own time.

Dis-Advantages

Now we will go through the disadvantages.

High Interest

Credit cards typically come with a higher APR than a traditional loan. If you are using the card sensibly, then this should not be a problem.

Many cards will also let you take cash out in advance, this usually has a very high fee attached to it.

Misuse Leads To Debt and Bad Credit

If you don’t use your credit card sensibly, there can be a whole myriad of problems. Asides from the fact you will pay heavily through missed payment fees and interest, you can also ruin your credit score.

This means that lenders in the future may not want to lend to you due to your bad credit card history.

This can affect you in a whole host of ways, from mortgages on houses to mobile phone contracts and car finance. With a bad credit score, you will suffer to get any of these.

Conclusion

We hope we have helped you in your decision with this article. Credit cards can be a massive help, but they need to be treated with caution. Make sure you pay back on time!
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