There are a great many benefits to be had from credit cards, both direct and indirect. Unfortunately, like so many aspects of life, having a credit card is a two-sided coin and there are equally many dangers and potential drawbacks. It is important therefore for credit card users to have some overall idea of how credit cards work and how they can optimize the benefits and minimize the negatives if a credit card is to be used to best effect.
The first benefit of having a credit card is the convenience which it affords. A credit card opens up a whole new world of payment opportunities for account holders, including – but not limited to – making purchases online or over the telephone. A credit card also very often eliminates the need to visit a bank or what may be an inconveniently located ATM in order to obtain cash.
Security is another benefit of having a credit card. Should the credit card be lost or stolen, the matter should be reported to the credit card provider without delay and the card will immediately be canceled. This limits the potential loss for the credit card holder, which would be automatic and perhaps substantial in the event of the loss or theft of cash.
Another benefit of having a credit card is that it allows the card holder to defer payment for items until a later date. This is because a statement is received on a credit card only once a month, detailing the outstanding balance and the date by which it should be paid. If the credit card account holder is careful in the manner in which they use their card and is careful clear their bill each month, this can be a very useful facility.
The dangers of having a credit card are equally something of which all credit card holders should be aware. It is imperative that credit card holders safeguard the security of their card and PIN at all times. Cards should always be signed on the reverse immediately upon receipt and a note of the PIN should never be kept along with the card. Credit cards should never be left in places such as cars or office desk drawers where they are more susceptible to theft and possible misuse.
Over-spending on a credit card and subsequent debt problems are a further danger to many who see credit cards as being an irresistible temptation. Credit card spending is something over which tight control should be maintained and there is always an option to ask the credit card provider to reduce the credit limit on the card to minimize the likelihood of this occurring.
The benefits of having a credit card are very real, provided the card holder takes sufficient steps to safeguard its security and moderates their usage of the credit card in an appropriate fashion.