Advantages and Disadvantages of a Credit Card

Who doesn’t see the importance of a credit card? BDO credit cards have been the pioneer payment methods that bring out convenience to both merchant and cardholder.

But with every powerful tool being used in the financial world, it takes responsibility to own one. Here is a few of the advantages and disadvantages of having and using a credit card.

Advantages:

  • Convenience – with almost every store now accepts credit cards as a form of payment, it proves easier to bring than having a bulk of cash especially when a cardholder is making a purchase that cost a large amount. Other than stores, credit card has opened the convenience of shopping in front of the computer rather than going around in stores.
  • Foreign Currency Transactions – credit card allows a cardholder to purchase products online. With a credit card, purchase of products that are stated in other currencies is possible and it will be the bank’s responsibility to pay the merchant in the currency it was bought.
  • Liquidity – credit card allows a cardholder to pay for goods that are urgently needed to be purchased despite having a shortage in cash. It can also address emergencies like hospital bills where a cardholder was not able to bring enough cash.

Disadvantages:

  • High Yielding Rates – credit cards are one of the types of debts that yield high interest rates. When a cardholder is not able to manage the debt properly, the interests earned are added to the fees which makes the debt difficult to payoff.
  • Spending Mindset – credit cards give the idea of spending instead of saving. A cardholder must learn that spending using a credit card takes responsibility. There are instances where a cardholder makes a purchase of goods that are classified as wants despite of not having enough cash.
  • Fee Complexities – using a credit card can be one of the most confusing tools that can be used for payment. Because of its nature, other than the interest rates, there are special rules on how these rates are applied. There are also rules that apply to certain actions which may cause additional fees. This becomes a challenge to an average workers who use the card without understanding the rules of its use.