Advantages and Disadvantages of Credit Cards

Credit cards usually enables the holder to obtain goods and services on credit from specified suppliers. They also enable the holder to obtain money from specific banks and other specified financial institutions. They are available to adults of approved credit worthiness locally and internationally. The companies offering these cards include: Barclays card, American express, access card and visa card.

Advantages of Credit Cards

  • One of the advantages of a credit card is that it enables the holder to get goods and services from specified sellers without paying immediately.
  • It is also convenient to carry around.
  • Credit cards have the advantage of enabling the holder to get money from specified banks
  • A properly used credit card increases credit rating of an individual.
  • Another advantage of a credit card is that it is safer to carry the card around than to carry cash
  • Some credit cards also have the advantage of being internationally acceptable.

Disadvantages of Credit Cards

Credit cards also have several disadvantages such as:

  • To acquire the card the applicant is required to have an established credit record.
  • The holder is charged high interest rate by the card company.
  • It is prone to abuse through fraud.
  • The interest is charged if there is delay in repayment.
  • A minimum age of 18 years is required for one to become a holder.
  • The holder may be tempted to overspend
  • Their use is limited to only specific areas (urban areas).
  • Faces competition from other means of payment e.g. cheques, money orders and postal orders.
  • Only few businesses accept cards.
  • Long procedures are involved in getting the card.
  • The cards can only be afforded by people with high income.

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