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Using a credit card good or bad?

Credit cards can be a wonderful way to shop and make payments to merchants or take cash advances, but wait, if you go overboard it can easily become a nightmare. There are some good reasons to use credit cards as well as some bad that are worth noting.

A credit card is not for everyone, there are some people who should just never have one. For example, those who have trouble keeping themselves on a budget should probably avoid getting any kind of credit cards. These cards can only lead to trouble in the wrong hands!

If on the other hand you are capable of managing debt and your finances then a credit card might be the best thing that has ever happened to you. With one of these credit cards you will be able to buy food when you are in a pinch or pay to get your car repaired if something goes wrong with it. When you have a credit card you would not have to worry about carrying too much cash in your wallet.

Credit Cards can make or break your credit history

One of the best aspects of credit cards is the fact that they are very easy to get. All though in some cases this could be seen as a drawback. Many persons are getting approved for these credit cards who have no credit history or who have bad credit history.

Using your card wisely is important to survive in the world of credit. Did you know that you have to have a good credit history to buy a car or a home? If you have no history or poor history you could find yourself getting turned down for just about nay kind of loan in future Responsible use of credit cards can be a powerful tool for you to build a credit history that you can be proud of.

If you get your credit card and you then make all of your monthly payments on time every month then you will be in the perfect position to get approved for any other kind of important loan that you need in the future. Moreover, the credit card issuer will typically not levy any fee or interest if you make your card payments in full by due date.

Understanding Credit Card fees and charges

You can revolve credit using credit cards. In such scenarios you will be liable to pay certain charges and interest which may differ from bank to bank. If you do not pay your credit card dues by the due date, interest charges and other fees like Late Payment fees are charged when you make part payment or your payments are late. To better understand what charges and fees is typically levied let us look at four probable scenarios in the table below.

Amount Paid When Charges
Full Amount On or Before Due Date Nil
Full Amount After Due Date
  • Late Payment Fee
  • Interest Charges on outstanding balance  on due date
  • Taxes as applicable
Part Payment above minimum due On or Before Due Date
  • Interest Charges on unsettled balance and  any subsequent purchases
  • Taxes as applicable
Part Payment above minimum due After Due Date
  • Late Payment Fee
  • Interest Charges on all outstanding  balance on due date and any subsequent  purchases
  • Taxes as applicable

These scenarios are not exhaustive but are only indicative of the kind of charges/fees that you as a credit card customer might incur in various scenarios.

Conclusion

It is how you use your credit cards can make it good or bad for you. When used wisely, credit cards can help you make the most of your financial resources. You can use cards to make some purchases more easily and securely — like travel reservations and they can even help you budget and save. But to enjoy these benefits, you need to choose a card that’s right for you, and use it carefully.

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Manish Misra
Manish is an Internet Professional and is currently employed with India's leading internet portal. He has versatile experience spanning across internet, e-business and retail financial services domains.

He has authored several analytical articles on personal finance in The Times of India and The Economic Times. Being a finance geek and having been involved with internet since the early days of the medium, he was a great help and source of guidance while formulating personalmoney.in. You can know more about Manish at ManishMisra.com

Disclaimer : Manish has agreed to write in his personal capacity. Views, opinions expressed in his articles are his own and do not necessarily reflect the views of his employer.

http://www.personalmoney.in

9 thoughts on “Using a credit card good or bad?

  1. credit card can be a friend if used correctly, but many are so spoiled if you have a credit card such as the urge is always shopping for items that are not important, of course it would be a credit card for our own enemy

  2. I canceled all my credit cards. Now the debit card is offering all felicities a credit card offered. If you read the credit card statement, all purchased you are paying 10 to 15 % extra. Plus the service tax, late fee, fuel surcharge, etc. ….batter canceled all the credit card today and be a debt free and a happy person.

  3. Credit card is not bad at all.However,it is true that our spending habit can make the experience related to it very bad .Conclusively,I just want to say that if we spend wisely through it, can give us great experience otherwise only debt.
    Quick Quid

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