The Pros and Cons Of Credit Cards
There are people who love credit cards and people who hate them. If you’re trying to decide whether to get a credit card or not, consider these pros and cons.
Pros of Credit Cards
- More purchasing options over the phone, via the internet, and in person. If you only have cash, you’re limited to in-person purchases unless you purchase money orders.
- The credit boost. If used correctly–making your payments on time and keeping your balance low–credit cards help you build a good credit score that you can use to qualify for a mortgage or auto loan.
- Funding for emergencies. While not the best option for covering an emergency, a credit card can help you cover an unexpected expense if you can’t afford to pay it from savings.
Cons of Credit Cards
With all the benefits that come along with using credit cards, there are some downsides that may turn you off.
- Temptation to spend more than you can afford. Credit cards open up additional purchasing power and give you the illusion that you have more money than you really do. Studies have shown that people are more willing to spend with credit cards than other forms of payment.
- They reduce your future income. Each time you use a credit card–or any form of debt–you’re borrowing from money that you haven’t earned. A portion of your future income has to go toward repaying your credit card balance if you want to protect your credit.
- Potential for debt. You create debt each time you use your credit card. You can keep the debt from growing by paying off your balance each month, but if you only pay the minimum and keep making purchases, your debt will grow.
While credit cards have some negative aspects, they can be minimized as long as you’re smart with the cards you choose and use them wisely. If you’re looking for a credit counsellor in Toronto, get a quick assessment with us today or call us at 416.900.2324.