Credit cards have come a long way since they were introduced in the 1950s. They have evolved in every sense and today more than 2 billion credit cards are in circulation around the world. With respect to the pros & cons of using credit cards, there are two types of people, one who are dire supporters of having a credit card and for some, it is a huge no-no.

Also, like every other thing, credit cards have several advantages and disadvantages attached to them. And like every good financial advisor, our job is to make sure you are aware about everything related to finance. Today, we will be weighing the pros & cons of using credit cards to ensure you can make an informed decision of whether you want to have one. Let’s begin-

Pros of having a credit card

•  Increase your purchasing power: Credit cards allow you with an option to make purchases worldwide, online, with a tap of your finger. You can use your credit card virtually anywhere. Generally there are zero extra charges. This helps in increasing your purchasing power. When analyzing the pros & cons of using credit cards you need to understand how it will increase your purchasing power.
• Get rewards: Savings can be enormous if you know how to use a credit card right and if you choose the right credit card for yourself. From lifestyle to fuel, there are credit cards for every need. You have to analyse which one works the best for you when seeing the pros & cons of using credit cards and which one would you be able to benefit from the most.
• Spend now, Pay later: If you face a big expense that needs to be taken care of today, you can not use your in hand cash else every other sphere of your life might suffer due to that. Using a credit card give you an option to take care of the expense today. And you can pay it off over time at your own speed. This will turn the big expense into smaller installments.
• Build and improve credit: Credit cards can be a great way to build and/or improve your credit history. If you are new to credit, credit cards can help you build a good credit record. You just need to timely payment of your bills and keeping the spend ratio below 30%. This shall prove to be beneficial in the future whenever you seek credit.
• Be prepared for emergencies: You can use your credit card during an unplanned expense or a month end cash crunch. You can spend money during such times using your card. Also you can pay it off easily whenever you can in easy installments. In this regard you can see the pros & cons of using credit cards.
• Protection from Fraud: In a credit card, you are under a risk of losing all the money you have in your account. In case of a credit card, even in a fraudulent situation, the most a thief can do is to carry out transaction worth your credit limit. Same is the case with cash, if you lose it once, the money is lost forever. In case of a credit card you can contact the bank authorities and report the loss of card and get the card blocked.
• Fast and easy usage: Credit cards are very easy to use. You can use them on a POS machine nearly everywhere in the world or use them for an online transaction anytime you want. The transactions occur almost instantly so there is no waiting time involved as well.
• Withhold payment for billing errors: In case there is a billing error on a particular payment, you can choose to withhold payment. Which is not possible in a debit card payment or cash. You need to wait for a refund from the merchant or in the case of cash, physically go and request for a refund. You can avoid this problem if you carry out transactions using a credit card.
• Cash free: You no longer need to carry cash. You can use your credit card almost everywhere for all basic requirements. Cash is risky due to the possibility of theft and inconvenient as well. So you can choose to go completely cashless by using your credit card.
• Track your expenses: Contrary to the popular belief, you can track your expenditure using a credit card. Since the transaction history is maintained with as a statement, at the end of every month/year you can find out how much much you have spent and what are the areas you can cut back from.
• Complimentary extras: A lot of card companies provide you with an option of not just cashback and savings. You can also avail the benefits of getting complimentary dining offers, shopping vouchers or even lounge stays on airports from your credit card. You need to check this before you get a card for yourself.

Cons of having a credit card

• Interest: When understanding the pros & cons of using credit cards, the most obvious drawbacks of using a credit card is that you might have to pay back with added interest. But there is a way around that. The first way is to pay off the spends in full before the grace period ends. This can be helpful in avoiding any interest. You can also apply for a card which has 0% introductory APR. It will give you time to pay off purchases without accumulating debt.
• Late fee: Another obvious one but definitely a drawback. You might miss out on a few payment deadlines sometimes. But in the case of a credit card, your laziness or forgetfulness can come with a late fee. One should adapt to and make it a habit paying expenses on time to avoid this situation.
• Overspending: While a few people numerous  charges on their transaction history as red flags and men their shopping ways. But for others, it might turn out to be just another way of them buying things they don’t need ( but they will always have a reason).  With the money that they don’t have (at least not yet). People will unhealthy spending habits should refrain from getting a credit card.
• Degradation of Credit: As mentioned earlier, credit cards are a good way to build a credit history. This is definitely true. But in some cases, people tend to miss payments and indulge in activities that might hamper their credit score. This not only increases their chances of getting into debt. They also lose the opportunity of getting loans at good rates. Or they even might be denied a loan altogether in case their credit rating drops too low.
• Reduction of Future Income: When you spend using a credit card, you actually spend money that you will be earning in the future. Therefore, the money that you make in the future is actually money you earn minus the money you need to pay for your expenses.
• Confusing Terms: A lot of credit card providers give away lucrative offers. When you try to perceive the pros & cons of using credit cards, you need to learn that these offers might not always be what they seem to be. Sometimes you might find the terms and conditions on offers twisted and complicated. Hence, you might not be able to understand it fully or misunderstand it while getting the card.
• Fraud: Debit cards are less risky than cash and debit cards but they are not 100% secure too. Your card or identity might be stolen and the credit amount can be used against your will and knowledge. You can get your card blocked as soon as you find out about the theft. But sometimes the thief might be ahead of you and might carry out the transactions before you figure anything out.
• Potential for debt: Credit cards let you use money that you haven’t earned yet. Sometimes your conditions might change. For instance, you might not earn as much as your credit card bill amount. In such a situation you might miss your payment. The expenses will keep piling up with the interest and other expenses.
• Extra charges: Not all credit cards are free. Sometimes you need to pay some joining fees or even an annual subscription fees to make use of the card. This makes it all the more crucial to understand your requirements and getting a good credit card accordingly. Also, you need to ensure that you understand these costs and whether or not they are feasible for you, beforehand.
• Loss of privacy: Digital payments are easy. With credit cards, they become all the more easier. This comes at a cost of losing out on the liberty to spend anonymously. When weighing the pros & cons of using credit cards, you need to understand that every transaction is recorded and you can not keep them a private matter anymore.We hope that you know all everything about a credit card now. Go ahead and make the crucial decision of whether you should get one. In case you feel you can not follow this 3 Step Guide To Picking The Best Credit Card For.  Also, these Tips and Tricks To Make the Most of Your Credit Card might come in handy if you already have one. Stay ahead of the curve with IndiaLends.