Credit Cards: Advantages And Disadvantages Of Using Them

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Shivani Singh
Shivani Singh
Shivani has been an avid reader of newspapers since her childhood and likes to know what is happening around the world. Her love for news and bringing forth the absolute is what drove her writing for the people. She has worked in the industry for over 4 years and believes that people’s basic rights should always be honoured. Apart from reading, she is a foodie and loves to try her hands-on cooking different cuisines.


•            Credit Cards offers ease of transactions while only making minimum payments

•            Credit Cards also leads to impulsive buying and overspending

•            Credit Cards could make or break your credit score as it is like a personal loan

A Credit Card that is offered by a financial institution is like a personal loan and makes it easy for consumers and households to make payments. Credit cards also offer ease of transaction at merchant outlets, and lets one purchase things and merchandises and pay later.

Having said this, Credit Cards are among the most expensive ways to borrow in terms of the interest cost.

Moreover, such convenience can induce poor financial habits, such as overspending and extra borrowing.

Let us look at some of the Advantages and Disadvantages of using a Credit Card

Anil Pinapala, Founder and Chief Executive Officer (CEO) of Vivifi India said, “A credit card is a great method for all your monthly payments but may not be the best option for availing of emergency credit”.  

Advantages Of Using A Credit Card:

  1. Boost to purchasing power, the purchasing power of the borrower is enhanced as he buy for more than funds available which can be paid in future
  • Credit Cards often offer reward points for spending. The more a user uses the more points he collects, which can be redeemed for a statement credit or merchandise, however, the ratio of rewards points varies with the type of card and the institution which has issued the card
  • Helps create a credit record
  • Credit card issuers typically have deals in association with retailers and other companies
  • Credit cards offer other value-added services such as complimentary airport lounge access, cashback on fuel stations, among others

Also Read: What Is Line Of Credit And How It Works?

Disadvantages Of Using A Credit Card:

  1. Credit Cards often leads to overspending and impulsive buying
  • Carrying forward a balance on a credit card is a very expensive form of credit, with finance charges of 23-49% on the unpaid dues
  • Impacts your credit score negatively if the users miss payments
  • Generally, Credit Card comes associated with a fixed annual fee making it an additional expense
  • Delayed payments on credit cards attract late fees

Co-Founder of MoneyTap, Anuj Kacker said, “Credit cards are flexible and make shopping rewarding for customers if used mindfully. However, it can also be dangerous sometimes, especially if you fail to repay your bill on time. Or you only pay the minimum amount, which leads the unpaid amount to be transferred to the next month along with a huge rate of interest.” Kacker added, “Also, if you only make minimum payments while shopping impulsively, you will end up creating more debt for yourself, and your credit score might get affected by frequent defaults on payment. Apart from this, there is also a risk of credit card fraud and theft.”

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