Credit card usage has dropped in the United States since the beginning of the recession. Americans are much more careful now, and are not interested in accumulating debt. If your credit is good, you can use credit cards to your advantage.
Even though credit card usage has declined, credit card companies are still giving out credit cards. There are even cards available that do not charge annual fees, but they are only given to consumers with good credit scores. So if you’re going to have a credit card, be sure to look for one that does not charge you a yearly fee to use it.
Let’s take a closer look at the pros and cons of using credit cards:
Pros
Some cards award points, cash, and airline miles for usage – sometimes you will receive free accident insurance if you book your travel arrangements using your credit card.
If you pay off your card each and every month, you can use the credit company’s cash for free.
Credit cards can be a safe and secure way to make online purchases.
It is an easy way to track your spending.
Can help or improve credit scores if used properly.
An easy source of money during an emergency.
Some cards offer extended warranties on items you purchase – can be up to a year of additional warranty.
Cons
Can cause you to over spend.
Interest rates are usually very high – national average is over 14%. If you have bad credit, it will be over 23%.
Credit cards can have exorbitant fees if you miss a payment or go over your credit limit.
If used improperly, they can destroy your credit rating.
It’s hard to get out from under credit card debt once it gets out of control.
Having a credit card has its advantages, and they can be quite substantial. They are not for individuals who cannot control their finances. You have to be aware of the bad as well as the good. Your credit history is something you must guard if you want to purchase a home or an automobile. One scary statistic is, that of the households in the U.S. that carry credit card debt, the average amount owed is over $14,000. That statistic shows you how easy it is to get in over your head.
When you have a good credit history you will be able to get the best interest rates that are offered. Not all credit is equal. Those with bad credit are the ones who are charged fees and higher interest rates not only for credit cards, but also for auto and home loans.
If you’re going to use credit cards, be smart about it. Don’t fall into the credit card trap of spending more than you can afford. You’ll end up regretting it for a very long time.
