Pros and Cons of Using Credit Card

Pros

Instant Cash

Credit card holders can get cash instantly whenever and wherever they need.

Convenience

Credit cards are convenient and time saving for cardholders from searching for an ATM or keeping cash on-hand.

Purchase Power and Ease of Purchase

The purchasing power of the credit card holder can increase due to allowing credit purchase by using credit cards. It makes easier to buy things. There is no need to carry bulk amount of cash with the card holder for purchase of goods. It is very useful and easy for e-ticket booking (Train, Air, bus, hotels, Theater, pilgrim dharsan etc.).

Protection of Purchases

The credit card statement can be a voucher for the purchase when the original receipt is lost. Some credit card company may offer insurance coverage on large purchases.

Create a Good Credit Worthiness

The credit worthiness of the cardholders is proved through making prompt payment. The creation of good credit worthiness is useful to the cardholder in certain circumstances like applying for loans, jobs etc.

Emergencies

Credit card helps to make some emergency payment for certain dues like motor vehicle installment due, rent, Hospital bill etc., and also it will be very helpful in emergency situations like car breaking down, flood, fire etc.

Credit Card Benefits

Credit cards offer some additional benefits like discounts from particular stores or companies, bonus such as free airline miles or travel discounts, and special insurances (like travel or life insurance.).

Cons

High Interest Rates

Charging high cost of loan is the biggest drawback of credit cards. The interest rate for purchase, balance transfer, cash advance etc. is very high. These interest rates make the actual cost of any purchase higher because of the higher interest rate component. Getting money is easier by using credit card with high rate of interest.

Lavish Spending

Normally, the human tendency is to spend lavishly when they have more liquid cash. Credit cardholders are easily influenced to spend more money through some offers like lucrative discounts, cash back etc. which drive cardholders to increase their debt.

Heavy Penalty

Issuers of credit cards are charging heavy penalty for late payments made by the card holders. The issuer can take very serious action against the cardholders for default in repayment of debt with penalty.

Conclusion

Credit cards are a new innovation in financial services introduced by the financial institutions in extending easy availability of money. Credit cards have been transforming the Indian economy in a big way. Credit card is fast catching the imagination of the people, in particular, the younger generation in a great manner. Credit cards are more convenient to people who can avail of varied services without paying in money at the cash counter.