What is a credit card?

Credit card is a 3-inch by 2-inch piece of plastic, which holds the power of simplifying your financial aspects, or it may end up ruining your financial life if you didn't use it wisely. 

You may have wondering, nowadays credit card is an essential item for everyone, but, there are still people prefer to spend cash instead of using credit card.

Whether or not you are using a credit card right now, you should take a look on below list of pros and cons to consider is credit card a good fit for you? 

  PROS  

【1】 A Convenient Spending Tool

As mentioned, credit card is just a 3-inch by 2-inch piece of plastic, but it carries many advantages to us.

First of all, it is easy to apply from various banks. As there are many types of cards with different benefits, you may choose them based on your own purpose.

Bring this small card along in your wallet, and swipe it anytime and anywhere as you wish without carrying cash around.

This small card contains certain credit limit, you can spend minimum or maximum amount as needed without exceed the limit.

【2】 An Essential Tool to Track Your Payment Behavior

You are advisable to own a credit card if you not yet borrow for any loan products.

It is an important step to keep a good payment history as it will helps you to build a good credit score, which increasing the chances of approval for loan products such as car loan or mortgage loan. 

【3】 For Emergency Use

Credit card can use at anytime and anywhere, meaning it can use within our own country as well as other countries. 

You can spend using your credit card if you have not enough cash to pay for some unexpected incident occur.

But make sure you must have the ability to pay back the amount, or else, the interest charge by the credit card is relatively high.

【4】 Earn While You Spend

Some cards offer rewards such as cash back, loyalty points or air miles on every dollar you spend on eligible purchases.

You can enjoy some discounts while you spend, or earn the reward points to redeem with the bank's reward program or airline loyalty program.

【5】 Credit Card Can Work In Any Currency

Credit card can be use internationally, no matter in what kind of currency.

Although there is currency conversion fees apply, but it makes you more convenient in making payment if you have insufficient money exchange upfront during your trip.

Furthermore, there are some credit cards that will waive the conversion fees for international purchases, which is very useful if you having international trip or often shop at overseas online store. 

  CONS  

【1】 Paying High Rates of Interest

Please keep in mind that credit card isn't your cash, it is a form of short term borrowing tools.

You buy now and pay next month, that's the rules of using a credit card.

If you do not pay off your full balance each month, the interest rate as stated will definitely add on to your balance amount.

This is so called the late payment interest rate.

You might end up paying more than your initial spending amount.

【2】 Hidden Cost 

Besides the expensive interest rate, you will also be charging a fee if your payment is overdue, or perhaps you miss out your payment.

You will also need to pay a penalty if you spend over the credit limit.

Do make sure to always pay your bill on time and do control your spending as well.

【3】 Cash Advance Fees

Do not attempt to withdraw cash from your credit card if it is not necessary.

Most card firms will charge certain fee or charge a percentage based on your cash advance amount, whichever higher.

Please note that there is no interest free period on cash withdrawals, cash advance interest rate is relatively high in this case. 

【4】 Annual Fees

You are required to pay annual fees for a credit card, depending on which cards you choose.

If you refuse to pay this charges, you may have to spend a certain amount each month, or you can try to call up the credit card center to waive the annual fees.

Most importantly, it is recommended to go through the card features and terms before choosing a card. 

【5】 Pick the Right Card

Make sure you pick the right card, otherwise, you could end up paying more than you expected and it does not provide any spending benefits to you.

Try to choose a card which can match your needs and perhaps some other extra benefits which suit you. 

Although credit card has both the good and bad outcomes, but it is solely depends on how you use it.

In my personal opinion, I support the usage of credit card.

You must choose the card that best suits your needs, spend wisely, make your payment promptly, and do not overspending.

Bear in mind with these few points, credit card actually can helps you more than you expected!