Credit Card

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The main benefit of owning a credit card is convenience. As mentioned earlier, credit cards allow you to purchase goods and services without ready cash. It also gives the cardholder a timely payment method purchased over the Internet or phone. A credit card also allows the cardholder to make small short-term loans provided that the amount to be loaned will not exceed the maximum credit line for the card. The interest on the short-term loan only reflects on the remaining debt and not on the full amount. Credit card can also be used during times of emergencies. Almost all credit cards offer incentives and additional benefits to the cardholders. This can be in the form of reward points that can be redeemed, insurance coverage on the purchases, cash back, air miles or discounts. It can also establish good credit history for you.

However, credit cards, if not used properly, can spell trouble for the cardholder. Of course, the credit card per se is not at fault here. It is how you use it that can make or break you. First, you can become an impulse buyer and tend to overspend. You may find yourself buying things and services you can’t really afford. Lost or stolen cards may result in unwanted expenses and can inconvenience you. Owning more than one credit card can lead to further debt. And of course, there is always a risk when you use your credit card, especially in remote places. It can end up in the wrong hands and result in fraudulent use of the card. It will be months before you can resolve that particular issue.

A credit card can be an asset granting that it is used properly and carefully. But if not handled well, a credit card can be a liability.