Credit cards allow us to pay for things the cashless way and do it by an easy credit. They bring a lot of simplicity to our lives but credit cards have their own drawbacks. Here are a few of them.
High interest rates
By far the biggest drawback of credit cards is the high cost of loan. The APR's for purchase, balance transfer, cash advance etc. are very high and skyrocket if you miss on few payments. These interest rates make the actual cost of any purchase higher because of the high interest rate component. So, the money with credit card is easy money but at a very high interest rate.
Easy to spend
Money is awfully easy to squander with credit cards. Just a swipe and its done. This ease and the fact that credit card companies encourage spending with lucrative discounts, cashback etc. can drive a credit card holder into buying frenzy, which can drastically increase the credit card debt.
Missing on repayments is costly
Credit card companies severely penalize late payments. Things like slapping of a full late payment fee even if a credit card holder misses the repayment by a day, revoking the rewards instantly, applying high APR rates instead of low introductory rates are not uncommon. Besides, costing financially the default on repayments can also blemish the credit report, which has very serious repercussions on the financial future of an individual.
These three disadvantages can easily jeopardize the benefits of any credit card. Though, the credit cards by themselves do not have these disadvantages, it is the misuse of credit cards which cause the trouble. Take care to repay your outstanding balances on time and don't go on impulsive buying with your credit card. This will save a lot in terms of money and reputation. Secondly, it is always advisable to shop around before settling for any particular credit cards, the idea is to get a credit card, which has relatively low interest rates and other fees. If, during the use of credit cards the APR's become unmanageable simply try to transfer your balances to a new low rate credit card. Having a good credit history will always help get a balance tranfer with ease. Last but not the least, never take cash advance using your credit card. The APR's rate shoot through the roof when you do so and this is a very very costly way to get cash.
