Credit Card: Comprehensive Guide to Pros and Cons

A credit card is a kind of plastic money (plastic card) issued by a bank or financial company to people.

It allows a credit card holder to buy goods and services on credit. There is a condition between the cardholder and the Credit Card Provider Company.

Credit cardholder needs to pay the borrowed money back with the fees & additional amount if there is any. There is a fixed amount that a credit cardholder can spend and need to pay back in order to reuse the given amount.

Credit cards are different than any other card which needs to research every month. Herewith the credit card a user has access to a certain amount of money they can spend and later need to pay back in full or in the form of EMIs which also include a few types of fees and interest.

A credit card is a widely used plastic card these days. It gives cashback offers and some other occasional offers which attract people to use this type of card. There are a few advantages (pros) and disadvantages (cons) of credit cards.

Types of Credit Card offered by Bank

1. Business or Commercial Credit Cards:

These types of credit cards are specially offered to business owners and executives and have most of the features the standard credit cards have. It has some special offers and benefits exclusive to the business world.

Also, business credit cards have a higher credit limit compared to standard ones. All credit cards have some specific features and offers. You should check the terms and conditions of the card before applying for business credit cards.

You May Read: How to Stay Safe from Credit Card Fraud

2. Personal Use of Credit Cards:

There are so many credit cards offered by the bank for personal use a few common names are travel credit cards, fuel credit cards, shopping credit cards, premium credit cards, etc.

3. Student Credit Cards

Some of the credit cards offered by banks are exclusively for the student and there are some special benefits for students. Students can get extra discounts by using these student credit cards.

Common Features or Pros of Credit Cards

1. Balance Transfer Benefits: By using these features you can transfer one credit card’s outstanding balance to another credit card and get the benefits of the billing
2. Rewards Points: When you spend money using your credit card the banks offer rewards points you can use these rewards points to adjust your statement or can get some other benefits.
3. Cash Back benefits: Some of the credit cards offered by banks give you benefits of cashback which means you will get some percentage of your total amount.
4. Low-interest rate benefits: Some banks offer a low-interest rate on their credit cards to benefit the customer.
5. Travel and hotel reward points: Few of the credit cards are specially designed to travel and hotel booking rewash. You can get reward points while booking a hotel or flight, train, and bus tickets.
6. Rewards points for airline ticket booking: This type of credit card is specially designed for airline tickets. Bank offers a huge discount if you book your air ticket using this credit card.
7. Retail rewards points: When you spend through local shops and outlets than also some of the bank’s credit card offers reward points.
8. No Annual fee benefits: Some of the credit cards are premium and some of them are free of cost which means no annual fees.
9. Prepaid credit cards: There are some credit cards that offer prepaid benefits.
10. Secured credit cards: Nowadays all credit cards are secured also some credit cards offer more security features.
11. Gas rewards point credit cards: These are credit cards specially designed for the purpose of gas rewards. When you use these types of credit cards to refill your gas you can get huge discounts or rewards points.

You May Read: How to Apply for a Credit Union Business Credit Card?

Cons of Credit Card

When anyone does not use credit cards carefully it can be very harmful to them. Here are some of the cons mentioned below:

• A credit card can make you spend more than required
• You will be spending on things that are not necessary because the funds are available on your card
• By easy availability of money to you can make you careless regards money and your personal finance.
• You might be rewarding yourself again and again because of the money laying on your card.
• By using credit cards you can destroy your monthly budget and spend more.
• Sometimes the cost of things is more by paying through a credit card.
• Sometimes credit cards cost you more including the fees of a credit
• When you use credit cards it destroys your future income because it is like you are borrowing money.
• You can lose money if it fails to replay on time by paying interest on the money you spend.
• It is difficult to get a loan in the future if you are not paying your credit card balance on time.