Cons Of Using Credit Cards
Using credit cards for payment is becoming very common nowadays. Credit cards are easy to use and offer a lot of benefits. While they are a convenient option to choose over checks and cash, using credit cards without proper knowledge of related charges could drag you into debts. Here are a few points you should consider before opting for credit cards.
Cons of using Credit Cards:
1) Interest is a trap: People often choose to use credit cards when they do not have enough funds to buy the required products. Once you buy the products you get a few days without any interest to repay the amount. The credit card issuers want you to pay the minimum amount every month and you can still use your credit card until it reaches the credit limit. The issuers apply interest rates to the pending amount that keeps on increasing. There could be a time when all these consolidated amounts are so huge that it becomes difficult to repay the balance amount.
2) Credit Cards can encourage spending: Spending money using a credit card is easy as you have to just swipe your card for payment. You may spend much extra when using a credit card as compared to using cash as the credit cards have a higher credit limit, whereas it is difficult to carry so much cash. It is easier to overspend when you get rewards in return for every transaction making it difficult for you to stop.
3) Late Payments: The credit card issuers apply huge late fees if you are not able to repay back within the time limit. This fee goes on increasing with every late repayment you do. The total accumulated transaction fee can grow up to a significant amount making it difficult to repay.
4) Credit Score: Carrying a credit card won’t affect your credit score but spending more than 20% of your credit limit can affect your credit score. Even if you repay your full balance this credit score is considered as a risk factor in perceptions of credit agencies.
5) Terms can be confusing: Though many credit card companies say that these credit cards are interest-free and easy to payback options, it may not be always true. Credit card issuers often lay various charges that are not mentioned earlier. Also, it could be difficult to understand all the terms and conditions for new credit card users.
There are other ways to do cashless transactions instead of using credit cards, like using the digital currencies. Check out the Ethereum Code, click here to read more about Ethereum Code.